HBC, the owner of Saks Fifth Avenue said Friday it will part the luxury department store’s website into a separate business from its stores after it raised $500 million.
The separation permits Saks.com, which has about $1 billion in yearly sales, to raise money to fuel its development, the organization said. E-commerce has experienced explosive development during the Covid pandemic with several luxury retailers showing resilience.
“Luxury ecommerce is poised for exponential development,” said HBC chief executive officer Richard Baker on Friday. “Saks is primed to win huge market share.”
HBC said few changes will be noticeable to customers. Saks Fifth Avenue will remain the brand name for both the stores and e-commerce business, and shoppers will actually want to purchase online and get their purchases in stores. They can likewise make returns and exchanges utilizing their Saks credit cards either at stores or online, the organization said. The online business will oversee marketing and merchandising for the two segments.
Venture-capital firm Insight Partners has set up $500 million for a minority stake in Saks.com, giving the business a $2 billion valuation. The money will be used to invest in faster transportation, easier returns and better customer service, Saks’ 40 brick-and-mortar stores will become a separate business known as SFA, which will remain entirely owned by HBC.
Marc Metrick, who was CEO of the combined Saks businesses, is set to become CEO of the new digital organization.
Metrick touted the side project, adding: “As a standalone organization, we are well-positioned to make the appropriate investments to drive exponential development and deliver the same exceptional experience online.”
Former WeWork and Amazon exec Sebastian Gunningham is joining the e-commerce organization’s board, and Saks veteran Larry Bruce has been appointed president of the SFA business, reporting to Baker.
HBC was taken private a year ago by a gathering of shareholders that includes Baker. HBC likewise possesses the Hudson’s Bay department store chain in Canada, and the markdown business Saks Off Fifth.
Knowledge Partners’ other investments e-commerce stage Shopify, web-based media site, Twitter and membership meal pack service, Hello Fresh.