NEWSMAKER: Saks Global's architect Richard Baker walks away from checkered legacy

Richard Baker, who stepped down as CEO of bankrupt luxury shopping empire Saks Global, has had a long career at the intersection of retail and real estate investment, including some big early wins and, more recently, some crushing losses.

The seasoned property tycoon exited on Tuesday, replaced by former Neiman Marcus boss Geoffrey van Raemdonck, as the high-end retailer he helped create filed for Chapter 11 bankruptcy protection.

In 2024, Baker masterminded the $2.7 billion takeover of Neiman Marcus by his Canada-based conglomerate Hudson's Bay Co, which had owned Saks since 2013, and later spun off the U.S. luxury assets to create Saks Global and bring together storied department store chains Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman.

The real estate magnate became executive chairman of Saks Global and briefly added CEO to his job title earlier this month, when veteran executive Marc Metrick abruptly quit.

REAL ESTATE IN HIS BONES

Baker, a 60-year-old Cornell University graduate who still serves on advisory boards at his alma mater, has real estate in his bones. His father, Robert C. Baker, founded the commercial property-geared National Realty & Development Corp, and his maternal grandfather was Loomis Grossman, who helped popularize strip malls.

In 2005, Baker helped form NRDC Equity Partners, a private equity fund geared toward retailers. Today, its portfolio includes Galeria Karstadt Kaufhof, Germany's largest department store chain.

Early in his career, Baker had a magic touch. After buying Lord & Taylor in 2006, he led the company through the global financial crisis and oversaw a big jump in sales.

He acquired Hudson's Bay - North America's oldest corporation - in 2008, helping turn around its flagship stores after years of negative same-store sales growth.

Eventually, Baker folded Lord & Taylor into the Hudson's Bay portfolio, then acquired Saks Fifth Avenue in 2013, giving himself a major footprint in luxury.

But his wizardry was not to be eternal.

A 2017 effort to launch Hudson's Bay in the Netherlands failed. In 2019, as online retail threatened brick-and-mortar shopping, Baker sold Lord & Taylor for $100 million, with the chain folding soon after.

Hudson's Bay's Canadian operation shuttered all of its stores last year, after a staggering 355 years in operation.

SAKS' STRUGGLES

The Lord & Taylor sale was, in theory, designed to free Hudson's Bay "to focus on Saks and its upside potential,” Hudson's Bay CEO Helena Foulkes said at the time.

But Saks continued to struggle, leading to the 2024 merger to create Saks Global. The deal saddled the new company with more than $2 billion in new debt, at a time when global luxury sales were slowing.

Vendors began withholding inventory when Saks could not pay them in full on time, compounding its problems by contributing to thin stock.

"One walk through a retailer that doesn't have product on shelves, and the consumer finds another place to shop," said Marshal Cohen, chief retail advisor at Circana.

The vastness of Saks' store space clashed with Baker's focus on pure luxury, said Steven Dennis, president at SageBerry Consulting.

Unlike competitors Bloomingdale's and Nordstrom, Saks had no interest in chasing the market for slightly lower-tier, more accessible luxury. “The numbers just don't work if you only go after the top 1%,” Dennis said.

Yet Saks' real estate itself - which hosts the Saks Fifth Avenue, Saks Off 5th, Bergdorf Goodman and Neiman Marcus stores - remains enviable, with some 13 million square feet (1.2 million square meters) of store space in anchor settings.

The stores are covered by legacy leases that keep rents well below market, and reciprocal easement agreements give tenants a say in how a mall redevelops. Such embedded control can translate into real value for creditors who, in a bankruptcy setting, have a good chance of walking away with control of the company.

"To be fair to Richard Baker ... these businesses don't really have that much of a future," said Neil Saunders, managing director of research firm GlobalData. So "it's kind of sensible to try and monetize and squeeze them as much as you can."

-Nicholas P. Brown and Juveria Tabassum/Reuters