HBC, the owner of Saks Fifth Avenue, said Friday that it will split the luxury department store’s website into a separate business from its stores after raising $ 500 million.
The split allows Saks.com, which has about $ 1 billion in annual sales, to raise money to fuel its growth, the company said. E-commerce experienced explosive growth during the coronavirus pandemic, with several luxury retailers showing resilience.
“Luxury e-commerce is poised for exponential growth,” said HBC CEO Richard Baker on Friday. “Saks is prepared to gain significant market share.”
HBC said that few changes will be noticeable to customers. Saks Fifth Avenue will continue to be the brand for both stores and e-commerce, and shoppers will be able to shop online and pick up in-store purchases. They will also be able to make returns and exchanges using their Saks credit cards in stores or online, the company said. The online business will oversee marketing and merchandising for both segments.
Venture capital firm Insight Partners put $ 500 million into a minority stake in Saks.com, giving the business a valuation of $ 2 billion. The money will be used to invest in faster shipments, easier returns and better customer service. Saks’ 40 physical stores will become a separate business, known as SFA, which will remain wholly owned by HBC.
Marc Metrick, who was CEO of Saks’ combined business, is set to become CEO of the new digital company.
Metrick praised the break up, adding: “As an independent company, we are well positioned to make the right investments to drive exponential growth and deliver the same exceptional online experience.”
Former WeWork and Amazon executive Sebastian Gunningham is joining the board of the e-commerce company, and Saks veteran Larry Bruce has been named president of the SFA business, reporting to Baker.
HBC was closed last year by a group of shareholders that includes Baker. HBC also owns the Hudson’s Bay department store chain in Canada and the discount company Saks Off Fifth.
Other investments by Insight Partners, Shopify e-commerce platform, social media site, Twitter and subscription meal kit service, Hello Fresh.