Dive Brief:
- The newly spun-off Saks.com has closed on a $350 million asset-based credit facility arranged by Bank of America as well as a $115 million secured term loan arranged by Pathlight Capital.
- The facility is available to Saks to fund growth initiatives and corporate operations, according to a press release.
- An undisclosed portion of the term loan will be used to fund "certain obligations" to HBC, majority owner of the standalone online Saks business, that stemmed from its spin-off deal.
Dive Insight:
Saks is prepping for growth in its new life as an independent e-commerce business, separated at least on paper from its brick-and-mortar origins.
HBC announced a deal in March with private equity firm Insight Partners, which put up $500 million in capital to help establish Saks as a standalone company. That price gave Insight Partners a minority stake in the new company, valued at $2 billion when the deal was announced.
Meanwhile Saks Fifth Avenue, with its 40 stores, remains wholly owned by HBC and a separate operating entity under the moniker "SFA." Yet the digital Saks still says it has a "a seamless connection" to the Saks Fifth store chain.
With the new facility and term loan, Saks now has new capital as it tries to flex in the growing e-commerce luxury market. "Given our strong market position and the improving economic environment, Saks is poised to lead in luxury ecommerce," Saks CFO Vince Phelan said in the release.
Phelan added that "this financing combined with cash we already have on hand ensures we have substantial liquidity and flexibility to execute on our strategic plans and build on the upward trajectory we are already seeing in our business."
Saks.com generates $1 billion in sales and enjoys "99% unaided brand awareness" in the U.S., according to an April Cowen report. Cowen analysts, who spoke with Saks CEO Marc Metrick this spring, also noted that the banner picked up younger shoppers amid the COVID-19 pandemic, when many shoppers turned online as they avoided physical stores.
On announcing its spin off, Saks indicated it planned to make investments in styling capabilities and personalization. The company aims to build a "a hybrid retail and marketplace platform, expanding its assortment while maintaining a curated experience," Saks said in a March press release.
