Saks Global Enterprises will lay off 1,226 workers and close 15 stores by the end of May as the luxury retailer works through a Chapter 11 bankruptcy restructuring. The company filed for bankruptcy in January with $3.4 billion in debt, just over a year after combining Saks Fifth Avenue, Bergdorf Goodman, and Neiman Marcus under one corporate umbrella.
KEY TAKEAWAYS
California is bearing the brunt of the cuts. Canoga Park, Costa Mesa, and Palm Desert will lose stores this month, affecting more than 230 jobs combined, according to state layoff filings.
The bankruptcy's impact reaches beyond the new layoffs. Former employees who were laid off before the January 13 bankruptcy filing have had their severance payments suspended under U.S. bankruptcy law. Workers are now scrambling to cover bills without the income they were promised.
A former Saks.com photo studio employee in Pennsylvania was laid off in December with a three-month severance package, they told Modern Retail. An email arrived January 22 saying Saks Global was suspending all severance payments for obligations incurred before the bankruptcy date.
"Panic," the worker said when asked how they felt. "Right now, my unemployment benefits are all messed up, and I have no Medicaid, no health insurance. I have chronic health conditions."
Stretto, the bankruptcy services partner, handles claims for unpaid severance. The worker filed a claim for the majority of what they're owed, then called Stretto for help navigating the process. The voicemail suggested getting a lawyer. "I can't afford a lawyer," they said. "I'm not like Chanel or LVMH." Worth noting: the vendor panel includes LVMH, Chanel, Amazon, and Kering, all billion-dollar companies with legal teams. Individual workers filing claims have none of that.
Workers at the Pennsylvania studio saw the financial problems coming. Vendors stopped sending product samples after Saks Global fell behind on payments. "It was kind of like being on the front lines of the bankruptcy," the worker said. "When I first started there, we were so incredibly busy. We had so many samples coming in all the time. By the time I left, sometimes we'd only get a couple things in during the week."
Photographers and studio workers at the facility earned less than typical retail wages. The company pointed to the economically depressed coal region of Pennsylvania when setting pay scales, the worker said.
In a statement to Modern Retail, Saks Global said the suspension of severance payments was "not a reflection of their dedication to Saks Global, but a legal requirement" under Chapter 11 bankruptcy law.
Panic. Right now, my unemployment benefits are all messed up, and I have no Medicaid, no health insurance. I have chronic health conditions.
— Former Saks.com photo studio employee, Pennsylvania
What the Numbers Show
Saks Global has closed 20 of its 33 Saks Fifth Avenue retail stores since filing for bankruptcy on January 13. March brought 15 more closures to the list, with layoffs scheduled between May 6 and May 31.
Neiman Marcus was supposed to turn Saks into a luxury powerhouse when the companies merged in 2024. Instead, the $3.4 billion debt load from that deal pushed Saks Global into Chapter 11 after the company missed payments.
Richard Baker stepped down as Executive Chairman and CEO in January, and Geoffroy van Raemdonck took over. Van Raemdonck sent vendors a February memo outlining 18 months of unpaid bills and a prolonged payment plan that offered no real relief.
Saks Global secured $300 million of its $1.75 billion bankruptcy funding package in mid-March. Bondholders approved a five-year business plan. Amazon, LVMH, Chanel, Kering, and Brookfield Properties Retail sit on the 10-member panel of unsecured creditors.
Amazon's attorney has "little to no confidence" that Saks can successfully emerge from Chapter 11, she told the bankruptcy court.
What It Means for Workers
May is a terrible month to lose a retail job. Hiring slows in late spring before the back-to-school season picks up in July and August. Workers laid off in May face at least two months of tough job searching.
Pennsylvania's former studio worker has been looking for work for two months. "Every time I open LinkedIn, it's 'Saks this,' and 'Saks that,'" they said. "With all of the news about Saks, I can't tell if having Saks on my resume looks good or bad."
Post-filing layoffs should get severance as scheduled, since those are obligations the company can legally pay. Pre-filing layoffs sit in limbo, where filing a claim doesn't guarantee when or how much workers will receive. It just puts them in line behind the creditors with lawyers.
The Pennsylvania worker's advice for Saks Global: "I want them to stop making risky business decisions. I have no idea why they bought Neiman Marcus when they already owed so much money to vendors."
The Bigger Picture
Luxury retail was supposed to be recession-proof. Saks Global's $3.4 billion bankruptcy suggests otherwise. High debt loads, changing shopping habits, and overexpansion kill retailers at every price point.
Saks Fifth Avenue, Neiman Marcus, Bergdorf Goodman, Saks OFF 5TH, Last Call, and Horchow all remain open during the restructuring. Twenty closures in three months tells you where this is heading. The company will emerge smaller, if it emerges at all.
The 1,226 workers losing their jobs by May 31 are waiting to see if they'll be paid what they're owed before the company runs out of cash. The bankruptcy court will decide. In the meantime, bills are due.
TLDR
Saks Global is cutting 1,226 jobs and closing 15 stores by May as it restructures $3.4 billion in debt. Former employees who were laid off in December had their severance payments suspended due to bankruptcy law, leaving many without expected income or health insurance.
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