00:00I had a chance to catch up a little bit earlier with the CEO of Saks Global. Now they are
00:04in
00:04bankruptcy. They just recently filed their bankruptcy plan, hoping to emerge in June.
00:09And he talked a lot about the longer term opportunities. And he was very clear that
00:13the U.S. market, at least for right now, is where a lot of the growth is. And he still
00:16sees
00:17a big role, a big role for brick and mortar luxury multi-brand retail outlets. The CEO there,
00:25Geoffroy Van Ramdanek, he caught up with us just a little bit ago. Here's part of our
00:30conversation. We filed for bankruptcy a little bit more than four months ago and have made
00:35significant progress because we've secured 1.25 billion of liquidity. We've entered in a
00:40restructuring support agreement with our lenders to provide 500 million of exit financing.
00:46And then we just got court approval for a disclosure statement. So where we are right now is that we
00:51are
00:51soliciting votes for the plan of restructuration. We have support from the lenders and the unsecure
00:57credit committee, which includes many of the luxury brands. And then confirmation is scheduled
01:02for early June and emergence late spring, early summer. And some of the other legal issues that you
01:09had faced, including the dispute with Simon Property over some of those broken leases, has that been
01:13resolved as well? The conversation with Simon came to fruition in a really positive way. David Simon
01:21himself really worked to make sure that the collaboration of the partnership spirit was
01:25there. And so we just filed yesterday that all those elements are settled and we are continuing as
01:31great partners in many locations together. There was a lot of hand wringing when this bankruptcy
01:37was filed. People look at Sachs, Neiman Marcus, Bergdorf as kind of being the pillar of a multi-brand luxury
01:45retail
01:46experience. And I even spoke with some of those brands who were very worried about what the loss
01:51of those stores would actually mean for the luxury retail space. Have you given them enough
01:56assurances that not only are you going to exit bankruptcy, but that your long-term plan is going to be
02:02viable to thrive? So we've given a lot of assurance to the brands that, as I mentioned, the big groups
02:07are
02:08part of the insecure credit committee and they're supportive of the plan. What the plan shows is that we will
02:13exit with about 700 million of available liquidity that we are going to be profitable this year and grow
02:22the business to be a nine billion GMV business that is going to be done on a smaller, more productive
02:28and more profitable footprint. And that is going to be more profitable because we sell more at full price.
02:34We are showing growth that is going to be quality growth. And that growth for us means growth for the
02:39industry because we will be buying more from the industry. And ultimately, we have a path to be double
02:45digit EBITDA profitable. And I think that's really important to me. I came back to get this business out
02:51of bankruptcy, but to make sure that it is on stable ground and grows profitably because the role you
02:56mentioned is real. We play a very big role in the industry. We buy about three billion at cost from
03:02the
03:02brands. That's revenue that feed their own businesses. And a SACS Global that speaks to the luxury customer that is
03:09stable and growing and profitable is a cornerstone of the industry. I can understand how you can get to
03:15a double digit EBITDA. It was it by a fiscal year 2030 was the idea. But then when I looked
03:20at some of
03:21your revenue growth numbers, I mean, we're talking about a compounded annual growth rate over the next
03:26few years of like five, six, seven percent. Is that really achievable? When I look around the retail
03:31landscape right now, it's hard to find companies that have that type of compound growth rate.
03:36So I think you need to put this in the context of where the business is today. The business last
03:41year had
03:42liquidity problems. Those liquidity problems led to lack of payment to the brands and ultimately lack of
03:47inventory. So we entered the holiday season with very low inventory and almost no shipment of inventory in
03:55November, December, January and February. And so the performance of last year and at the beginning of this year is
04:03still
04:03negative compared to what we did pre merger. And so we are looking over the next two years to go
04:09back to what we did
04:10pre merger. And that is really a factor of having the inventory. We see that we when we have the
04:16inventory, we sell it.
04:17It's just a notion that we didn't have the inventory at all times. And we now see the value of
04:22it. And then ultimately, it is the
04:24strength of the company together that we believe can outpace the industry. I am curious about your
04:30relationship with them. And I mean, your background before you ran Neiman Marcus and now a Saks Global. I mean,
04:35you were a
04:35vendor yourself to a certain extent or you've worked for those vendors. Do you are you confident you're going to
04:41get most of
04:42them, if not all of them back the ones that you had prior to the bankruptcy and the issues? I
04:47am confident in the sense that today, if I look at the top 200
04:50brands that make the vast majority of our GMV, none of them have left us. So even today, knowing that
04:57we had payment issues last year,
04:59knowing that we went through a process, they all stuck with us. And if I look at the brands that
05:05are shipping today, we have more than 700
05:07brands that are shipping. And we received in last quarter, which ended at the end of April, one two billion
05:13of inventory. And that is
05:14one hundred and two percent of what we intended to receive. So I think what what's interesting here is we
05:20play a key role when we are not well
05:24financed. Brands are worried. But as soon as they see the liquidity coming, as soon as they see a plan
05:30that focuses on customer, that
05:31focuses on profitability and on retail. We had a lot of activities that were not profitable and that were not
05:36retail. Then they all rally and
05:38support. And I was in Europe over the last two weeks. All the conversations are about how do we scale
05:44growth? Because you need to put
05:46this business in the context of the global business. Luxury is being challenged today in many parts of the world.
05:52The U.S. is the market that is
05:54growing and we are the gateway to the U.S. customer. I am curious about the complexion of that market.
05:59There's been a lot of talk that, yes, you know, well to do
06:02people are still buying luxury goods, but they're also doing it in a different way. Some are are more cost
06:07conscious to a certain extent or
06:10value conscious is maybe the way of putting it. Some are also gravitating more to the resale market rather than
06:15buying a first
06:16hand. So if you look at the luxury brands and luxury customers, it's very correlated to the high net worth
06:23individuals. We do a survey every
06:25quarter that we call our luxury post survey. It is a database of customers who engage with us. It's
06:32statistically significant. And what we saw is we asked them a couple of questions. We asked them, how do you
06:37feel
06:37about your personal finances? And 76% of them said, I feel optimistic. And that's 11% up to last
06:46October. When we asked
06:47them, are you going to buy equal or more in the next three months? 57% of them said yes.
06:53And the willingness to pay
06:55full price is at its all time high. And so I think from a standpoint of the luxury customer that
07:01really
07:01participate multiple times in luxury, that segment is very strong. We see that our top customers are up to last
07:11year, despite the fact that the company is not up to last year. So I do think that is a
07:15very strong segment. Now, I think
07:18what customers are a little bit is what you're saying. They're discerning. So they're looking for the brands that offer
07:23newness, that offer value for the price, and that offer a brand that has strong congruence with its offering. And
07:30when
07:30those three categories characteristics are there, we see that there's no price resistance and there's growth. I think the
07:37challenges when the brand proposition is not as coherent.
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