What Saks Global’s Collapse Teaches Every C-Suite Executive About the Difference Between Running a Business and Owning One

Richard Baker reportedly wanted an empire.

Marc Metrick wanted to optimize one.

Neither of them, it turned out, wanted to run a luxury retail business — at least not in the way luxury retail actually requires. This distinction is precisely what put Saks Global into bankruptcy court thirteen months after the merger that was supposed to make it untouchable.

Their story isn’t really a retail story. It’s a leadership story with implications for every executive who has ever confused financial sophistication with operational mastery.

The Acquirer Who Confused Scale With Leverage

Richard Baker’s strategic logic was seductive in its simplicity: combine Saks Fifth Avenue and Neiman Marcus, control the majority of America’s luxury department store market, and use that consolidated purchasing power to finally gain leverage over the European luxury conglomerates — LVMH, Kering, Richemont — who had spent years dictating terms to American retailers.

What Baker misread was the nature of leverage in luxury. Scale matters in commodity retail, where the retailer controls the relationship because the product is interchangeable. Luxury operates on the opposite logic. The brand is never interchangeable, which means the brand always holds the power.

Bernard Arnault demonstrated this with characteristic efficiency when LVMH shuttered a Louis Vuitton shop inside Saks’ New Orleans location and opened a standalone boutique in the same mall complex, taking roughly $15 million in annual volume out the door without a single negotiation.

Baker’s response to the lesson was to double down, reasoning that owning both Saks and Neiman Marcus would flip the dynamic. It didn’t. It instead saddled a financially fragile operation with $2.7 billion in acquisition debt on top of the obligations already straining the business, while the brands Baker was trying to gain leverage over watched from a safe distance and quietly began planning their own standalone expansions.

The C-suite lesson here is inunderstanding what kind of leverage you actually have before building a strategy around leverage you only theoretically possess. Baker spent years and billions of dollars pursuing a negotiating position the fundamental economics of his industry made structurally unavailable to him.

The Operator Who Mistook Efficiency for Excellence

If Baker’s failure was strategic overreach, Marc Metrick’s was subtler and in some ways more instructive as it’s the kind of failure that looks like success for a very long time.

Metrick was, by all accounts, an exceptional numbers executive. He understood Saks’ financial architecture with genuine sophistication, and the moves he made were defensible on paper. The concession model — shifting from wholesale purchasing to a system where brands rented floor space, owned their inventory, and paid Saks a percentage of sales — reduced inventory risk and cleaned up balance sheet optics. Splitting the e-commerce business into a standalone entity attracted $500 million in investment at a $2 billion valuation during peak pandemic digital enthusiasm.

Both decisions made sense in a spreadsheet but were operationally catastrophic.

Where wholesale generated roughly 50% margin on every sale, concessions returned as little as 6%. Add too that luxury department stores derive their authority from curation — the invisible editorial work of buyers who go to market, evaluate hundreds of options, and return with a selection reflecting a coherent point of view about what their customer wants. Under concessions, that function disappears entirely, with every brand controlling its own floor space, installing its own product, and optimizing for its own sales. The customer, who came for a curated experience, finds herself in a very expensive undifferentiated marketplace model.

The e-commerce split compounded this by fragmenting the one thing luxury customers require above all else: consistency. A customer who bought in-store and online expected a unified relationship with the brand. Instead she got two separate companies with separate systems, separate vendor relationships, and separate incentives — none of which were aligned around her experience.

Metrick reversed both decisions eventually, but not before the operational damage had calcified into a talent exodus. The veteran store directors, the senior merchants, the client advisers who’d spent decades building the human infrastructure of luxury retail departed during the chaos. That knowledge doesn’t appear on a balance sheet; it can’t be replaced with a reorganization chart or a new technology platform. It walks out the door with the people who carried it, and it takes years to rebuild under the best circumstances.

Saks did not have years.

The Leadership Lesson Both Men Missed

There’s a category error sophisticated financial minds are particularly vulnerable to, and both Baker and Metrick fell into it. It’s the belief that understanding how a business makes money is equivalent to understanding how a business works.

Knowing the margin structure of luxury retail is not the same as knowing what makes a luxury customer loyal, nor is knowing how to extract value from real estate the same as knowing how to build a retail operation generating value.

The executives who succeed long-term in experience-driven businesses hold both kinds of knowledge simultaneously, and know which one to prioritize when the two come into conflict.

Baker and Metrick consistently prioritized the financial architecture over the operational reality. The brands noticed. The vendors noticed. The customers noticed. And eventually, the bankruptcy court noticed too.

The full account of what those vendors and customers experienced — and what it meant for the industry — is in my Forbes series on the Saks Global collapse. Part 2 is here: https://www.forbes.com/sites/lilianraji/2026/02/15/neiman-marcus-and-saks-fifth-avenue-part-2-when-debt-met-delusion/

Lilian Raji is a global fractional chief communications officer who helps founders and CMOs tell a better brand story. Connect with her on LinkedIn and follow her Forbes column.