Saks E-Commerce Unit Preparing for $6B IPO

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Luxury brand Saks Fifth Avenue’s e-commerce business is preparing to go public next year in a deal that could value the company at $6 billion — three times the e-commerce company’s valuation when it first formed in March.

Saks, a high-end retailer owned by Hudson’s Bay Company, is interviewing potential underwriters for an initial public offering (IPO) that could come as early as the first half of next year, The Wall Street Journal reported. Saks’ e-commerce spin-off was previously valued at $2 billion, though that could fluctuate ahead of its IPO.

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Private equity firm Insight Partners invested $500 million to become a minority owner of the new e-commerce entity in March, when HBC separated the digital side from the brand’s physical side it dubbed SFA. SFA was charged with managing the company’s 40-store portfolio.

At the time of the spin-off, HBC CEO Richard Baker said online luxury sales were “​​poised for exponential growth.” The company has since said that the e-commerce unit’s gross merchandise value increased 82 percent from the second quarter in 2019 to the same quarter in 2021, WSJ reported.

Luxury retailers like Saks were slow to embrace online shopping, but the pandemic forced them to change their tune. The strength of Saks’ e-commerce business helped its parent company restructure an $846.2 million defaulted commercial mortgage-backed securities (CMBS) loan backed by 10 Saks and 24 Lord and Taylor stores, Commercial Observer reported. Saks’ strong real estate footprint strengthened the deal as well.

The high-end retailer’s online success has pushed rivals to consider spinning off its e-commerce from physical retail as well. Investor Jana Partners, which owns Bloomingdale’s and holds a stake in Macy’s, called for the company to explore separating Macy’s online business, WSJ reported.

HBC did not immediately respond to a request for comment.

Celia Young can be reached at cyoung@commercialobserver.com.