Dear BoF Community,

Recently, we began receiving messages containing a letter from Saks Global CEO Marc Metrick addressed to over 2,000 brands associated with Saks Fifth Avenue, Neiman Marcus, and Bergdorf Goodman.

A message from a New York fashion brand captured the prevailing sentiment: “We haven’t received payment from Saks for over a year, and we also have outstanding invoices from Neiman’s and Bergdorf’s. This poses a significant issue for the fashion industry, particularly for smaller brands that cannot afford to act as banks, providing products we’ve already paid to manufacture over a year and a half ago.”

Metrick admitted to substantial payment delays over the past 18 months. He announced that brands would now be compensated under net-90 days terms, meaning payment would occur 90 days post-delivery. Additionally, he indicated that all outstanding payments, estimated to be tens of millions of dollars, would be settled in 12 installments starting July 2025.

While Metrick aimed to clarify the situation after months of uncertainty, retail correspondent Cathaleen Chen noted in her analysis that the plan appears to have backfired.

“If customers feel disinterested while shopping, it’s because vendors refuse to ship due to unpaid invoices, and discussions around this issue are prohibited,” the New York fashion brand added. “In contrast, Saks continues to host extravagant events for influencers and fashion insiders, seemingly funded by our contributions.”

Payment delays have plagued the fashion industry for years. In 2013, I highlighted the issue of poor payment practices, noting how retailers extended payment terms from net-30 to net-60 days. Now, Saks proposes a standard of net-90 days, making it nearly impossible for sustainable fashion businesses to thrive.

The expectation that independent brands, which rely on timely cash flow to fund upcoming collections and cover operational expenses, should continue to finance a company with $10 billion in revenue, illustrates the growing power imbalance in the wholesale market favoring large retailers, jeopardizing the health of the fashion ecosystem. Many brands have decided that rather than endure unfavorable payment terms, they would prefer to take their business elsewhere.

So, what options exist when retailers fail to pay? In 2021, Cathaleen wrote a practical guide detailing steps to mitigate the impact of late payments. Earlier this week, she discussed strategies for emerging brands to navigate wholesale challenges.

As mentioned in our This Week in Fashion newsletter, Saks must rebuild the trust it has lost by ensuring timely payments, even if they are slower than desired. This is crucial for fostering a healthy fashion ecosystem beneficial to all.

We will continue to track developments surrounding the Saks situation in the coming weeks and months. In the meantime, here are my other top picks from our recent coverage:

Here are my other top picks from our analysis on fashion, luxury, and beauty:

1. Saks Wanted to Clear the Air With Brands. The Plan Backfired. Relations between Saks Global and many of the 2,000-plus brands it carries seem to have worsened following a letter outlining new payment terms.

2. How Emerging Brands Can Solve the Wholesale Puzzle. Collaborating with department stores and boutiques was once the primary route for new brands to gain traction. Today, many opt for platforms like Shopify and Instagram first, although multi-brand retailers still hold significant importance.

3. Chief Product Officers Are Fashion’s New Power Players. Brands like Burberry, Michael Kors, and Under Armour are relying on product leaders to navigate economic challenges and foster innovation.

4. How Crown Affair Became the Queen of It-Girl Hair Care. Dianna Cohen and Elaine Choi have developed a beloved haircare brand featuring signature products like the hair towel and brush-applied dry shampoo. With new funding, they aim to reach a broader audience.

5. Paolo Carzana: London’s Slow Fashion Poet. The Welsh designer’s emerging label is poised to gain greater visibility at London Fashion Week this season.

This Weekend on The BoF Podcast

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Giles Duley began his photography career at an impressive peak, working for GQ and Vogue and even touring with Oasis. Despite this early success, he felt unfulfilled and sought a deeper purpose. Eventually, his focus shifted from glamorous events to documenting the effects of war on everyday lives. A pivotal moment occurred in Afghanistan when an IED explosion resulted in the loss of three limbs; however, Duley returned to conflict zones with a renewed dedication to capturing stories of love and resilience.

“There is a connection from where I started to where I am now which is stories and empathy,” he states. “There’s the story, there’s the storyteller, and then there’s the amplifier. And what brands and individuals can do is be those amplifiers to ensure those stories are heard worldwide. … I’ve realized that living my best life means helping others live theirs – and that is my purpose.”

Through his Legacy of War Foundation, Giles illustrates how creativity and empathy can transcend barriers, encouraging everyone to utilize their platforms and talents for meaningful change.

Wishing you all a great weekend!

Imran Amed, Founder, CEO and Editor-in-Chief, The Business of Fashion

Business of Fashion Source: https://www.businessoffashion.com/opinions/retail/assessing-the-storm-around-saks-fifth-avenue/ Fashion news, analysis and advice from the leading digital authority on the global fashion industry.