The Supply Side: Analysts suggest some retail bankruptcies are self-inflicted

In the first six weeks of 2026, Saks Global, the store operator of Eddie Bauer, and Francesca’s have sought Chapter 11 protection — reorganization — each with different issues and likely different outcomes when the bankruptcy process ends.

Saks Global, parent of Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman, filed for Chapter 11 on Jan. 14, citing financial struggles such as delayed vendor pay and skipping payments to bondholders following the $2.7 billion acquisitions of Neiman Marcus in December 2024.

The retailer wants to shift approximately $4.7 billion in debt. Saks said it secured a $1.75 billion finance deal with creditors to allow operations to continue at select locations. Other stores will close.

The retailer said on Feb. 10 that eight Saks Fifth Avenue stores and one Neiman Marcus store will close by the end of April. The retailer is also shuttering 14 Fifth Avenue Club personal styling locations. Saks’ off-price format, known as Saks OFF 5th, is being downsized, with 57 of 60 locations closing operations.

Dana Telsey, CEO of Telsey Advisory Group, said the Saks bankruptcy is no indication of cracks in high-end consumer spending. She said other luxury brands such as Ralph Lauren and Tapestry are performing well. She said consumers continue to spend on discretionary purchases and expected larger tax refunds could provide a boost to spending through the spring.

Neil Saunders, managing director of GlobalData, said department stores have had their challenges in recent years, but the primary cause of the collapse of Saks was mismanagement and the debt burden it assumed when acquiring Neiman Marcus.

“None of this was inevitable,” Saunders said. “And, as we have seen with Bloomingdale’s, when a retailer is run as a retailer, it can succeed.”

REINVENTION NEEDED
Scott Benedict, retail consultant and founder of Benedict Enterprises, said Saks is using bankruptcy to restructure debt so it can live again as a smaller enterprise.

“Some operators have stabilized through tighter inventory discipline, omnichannel fulfillment, and clearer value positioning,” he said. “However, the category as a whole continues to face the same structural pressures it has for years: evolving consumer expectations, competition from specialty and direct-to-consumer brands, and the need to redefine what a department store experience should feel like in a digital-first world.”

He said persistent underinvestment in technology and personalized customer experience are part of what pushed Saks into bankruptcy. Benedict said Saks will need to provide a curated service, styling guidance, and relationship-based selling, which is enhanced by data-driven personalization across digital devices and brick-and-mortar stores.

“Chapter 11 filings that provide financial restructuring alone won’t solve the core problem — reinvention must come through smarter investments in consumer insight, personalization and experiential retailers that give shoppers a compelling reason to engage beyond price or promotion,” he said.

Saks is expected to emerge from bankruptcy with 25 Saks Fifth Avenue locations and 35 Neiman Marcus stores.

SPECIALTY WOES
Saks Global, the store operator of retailer Eddie Bauer, filed for Chapter 11 on Feb. 9, citing $1.7 billion in debt, weak sales, ongoing supply chain issues, and increased cost of doing business due to inflation and tariffs. Assets were projected at $400 million.

This is the third time the brand has sought bankruptcy protection over the past 20 years. Roughly 200 stores in the United States and Canada have begun closing, with the final wind-down expected by April 30. The store at Pinnacle Promenade Mall in Rogers closed in January.

“This is not an easy decision,” said Marc Rosen, CEO of Catalyst Brands, which is licensed to operate Eddie Bauer stores in the United States and Canada. “However, this restructuring is the best way to optimize value for the retail company’s stakeholders and also ensure Catalyst Brands remains profitable and with strong liquidity and cash flow.”

Authentic Brands Group owns the intellectual property associated with the Eddie Bauer brand and may license the brand to other operators, the company said. The operations of other brands in the Catalyst Brands portfolio — JCPenney, Aeropostale, Lucky, Brooks Brothers and Nautica — are not affected by the filing, according to the company.

The brand’s e-commerce and wholesale operations will also not be impacted by the bankruptcy action because they are operated by Outdoor 5 LLC. That was a transition Catalyst made in January and became effective Feb. 2.

Benedict said Eddie Bauer will continue to exist as a brand and manufacturer, wholesaling its products to other retailers and perhaps a direct-to-consumer online business. He said the expense of running specialty brick-and-mortar locations is often unsustainable, particularly in the mall setting, where traffic is hit or miss, and labor turnover is a challenge.

Houston-based boutique retailer Francesca’s is also calling it quits. The mall-based retailer filed for Chapter 11 on Feb. 6. The 26-year-old women’s fashion and accessories business will close all 457 locations in 45 states. Arkansas stores in the chain are in Conway, Fayetteville, Fort Smith, Little Rock and Rogers.

Going-out-of-business sales are underway, with discounts up to 50%, according to the company. This is the second bankruptcy filing for Francesca’s since December 2020, when it was acquired by venture capital firms TerraMar Capital and Tiger Group for $18 million.

Benedict said retailers acquired by venture capital firms often have a short lifeline. He said the cash infusion is not enough if the core issues are not addressed. He said fast-fashion boutique businesses face lots of competition from online players and Walmart’s improved fashion business.

Again, he reiterated that retailers curating personalized shopping experiences and marrying online and in-store browsing and purchase data are better able to compete.

Retail sales in 2025 increased through December by 3.7%, and January sales rose 5.72% from a year ago, according to the National Retail Federation. NRF President Matt Shay said consumers are showing moderate spending on the heels of record purchases during the recent holiday season.

“Consumer spending continues to drive the broader economy forward, supported by healthy household finances and real wage gains that have increased purchasing power,” Shay said.

Editor’s note: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics.