Saks Global Severs Ties with Amazon Amid Bankruptcy Restructuring
In a strategic shift during its bankruptcy reorganization, Saks Global is set to dissolve its high-profile e-commerce partnership with Amazon, according to a Reuters report citing people familiar with the matter. The move underscores the deepening challenges facing traditional luxury retailers as they navigate digital transformations and financial distress.
The "Saks on Amazon" storefront, launched following a $475 million investment by Amazon in 2024, will be wound down. The original agreement committed Saks to pay Amazon at least $900 million over eight years for access to its vast online marketplace. However, Saks' recent filing for Chapter 11 protection has intensified tensions, with the retailer now seeking to concentrate resources on its full-price luxury business and core digital channels.
Court documents and sources reveal a deteriorating relationship. During a bankruptcy hearing, Amazon's legal counsel contended that Saks improperly pledged its iconic Fifth Avenue flagship store as collateral for a new $1.75 billion loan. Amazon argues the property had already secured Saks' payment obligations under their partnership, potentially setting the stage for a legal dispute over assets.
Further complicating the partnership was resistance from several of Saks' key luxury brand suppliers. Industry sources indicate these brands were uneasy about the association with a mass-market platform, fearing it could dilute their exclusive positioning. The bankruptcy proceedings provided an opportunity for them to reconsider or challenge the arrangement.
This exit aligns with Saks Global's broader restructuring plan announced last week, which involves closing most of its off-price Saks OFF 5TH stores and all remaining Last Call locations. The company is decisively pivoting back to its luxury heritage, betting that a curated, high-end focus offers a clearer path to profitability.
The unraveling of this partnership marks a significant setback for Amazon's ambitions in the luxury sector and highlights the complex realities of blending high-end retail with platform marketplaces. For Saks, it represents a costly retreat from a major digital expansion bet, now deemed unsustainable under its current financial constraints.
Reactions & Analysis
Eleanor Vance, Retail Analyst at Bergman Advisors: "This was an inevitable recalibration. The economics of the deal, structured with massive minimum payments, became untenable for Saks in bankruptcy. More importantly, the brand friction was never resolved. Luxury is about curated scarcity, which is fundamentally at odds with Amazon's ecosystem of abundance."
Marcus Thorne, Former Saks Executive: "It's a painful but necessary step. The capital from Amazon was crucial in 2024, but the strategic fit was always questionable. This allows Saks' new leadership to streamline operations with a singular focus: revitalizing the luxury customer experience without platform compromises."
David Choi, Founder of 'Luxury Disrupted' Newsletter: "A spectacular failure of corporate strategy. Saks took Amazon's money, alienated its brand partners, and now is walking away after burning who knows how much in integration costs. This bankruptcy isn't just financial; it's a crisis of vision. Heads should roll."
Rebecca Foster, Supply Chain Consultant: "The dispute over the Fifth Avenue building collateral is the real story. It reveals how desperate the cash situation must be and suggests creditors are in for a brutal fight. This exit isn't clean—it's the opening salvo in a complex asset war."