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Hi, and welcome back to Line Sheet. In today’s issue, some H.R. news about one of your favorite H.R. people
and two of our favorite companies, plus a check-in on LVMH Americas chief Michael Burke, who is making his presence known at the group’s U.S. headquarters in New York. I also have a note on Richard Dickson’s slew of big hires over at Gap. Inc. And finally, a surprise twist in the Saks Global drama that may determine the fate of the group—and, in particular, Bergdorf Goodman.
Programming note: Tomorrow on Fashion People, my guests are
Bedford Media proprietor Karlie Kloss and her i-D magazine guy, Thom Bettridge. They discuss the latest issue, and all it took to get this far. Extra-big thanks to Karlie, who fit in this interview just days (hours?) before giving birth. Listen here and
here.
Mentioned in this issue: Saks Global, Marc Metrick, Ssense, Richard Baker, Bernard Arnault, LVMH, the Goodman family, Gena Smith, J.Crew, Michael Burke, Gap, Zac Posen, Richard Dickson, Deb
Redmond, and many more… |
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A MESSAGE FROM OUR SPONSOR |
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Three Things You
Should Know…
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- Gena
to J.Crew Group!: I’m told that Gena Smith, LVMH’s longtime human resources honcho in the U.S.—you’ve all been interviewed by her at one point or another—is headed to the J.Crew Group. I’m not clear about the nature of her role—head of H.R.? Head of Madewell? International expansion?—but it’s a big deal no matter how you slice it.
Smith has been working at LVMH for 14 years, recruiting for roles based in the U.S., but also developing relationships
with designers and other people based here who might be good for jobs in Europe. No local yokel, she was part of the fabric of LVMH, and a trusted member of the senior leadership team. (She was also close to her former boss, Chantal Gaemperle, who unceremoniously exited the business last year.) Of course, 14 years is a
long time to spend at a company, and perhaps J.Crew Group C.E.O. Libby Wadle and board chair Kevin Ulrich convinced Smith that life had more to offer. A rep for J.Crew declined to comment. - Burke is in the house: Michael Burke, the new chairman of LVMH Americas, who oversees the North and South American businesses, has settled into the office on 57th Street and everyone knows
it. Like most people in his position, Burke has embarked on something of a listening tour, trying to figure out exactly what everyone actually does and what they should be doing. Naturally, it’s making people nervous: While there are local operations (Tiffany is headquartered there, and Sephora and Louis Vuitton are both giants in the region), the group’s main function is real estate—Burke’s expertise. There are layoffs coming to all of the big European groups—if they haven’t hit
already—and there’s no doubt that Burke, an exacting and uncompromising executive, is going to restructure. Ultimately, it’s up to him to decide what happens, and so everyone is trying to show him that they do the work.
- Inside the Gap Inc. hub: A while back, I wrote about Gap Inc. matrixing some of its functions,
agency-style, with executives working across several brands under the holdco umbrella. Zac Posen inaugurated the structure, and various functions have since combined, particularly in marketing. This week, the owner of Gap, Banana Republic, Athleta, and Old Navy advanced the plan by announcing a slew of big new hires, including former Coach and Tiffany creative director Reed Krakoff, who will advise on accessories, and ex Esteé Lauder exec John
Demsey, who is working on the beauty strategy. Nordstrom exec Deb Redmond is the new general manager of beauty, reporting in to chief strategy officer Eric Chan. Michele Parsons, Krakoff’s old Coach colleague, will be the general manager of accessories. These announcements have been in the works for months.
For those of you scratching your head: Krakoff and Demsey, who are both advisors to the LVMH-backed investment firm L
Catterton, have decades of operational expertise. They’ve also been paired with similarly equipped on-the-ground executives. One of the big issues at a holdco like Gap Inc. is cannibalization. If you have the same team advising on strategy across the portfolio, they can perhaps more easily figure out ways to differentiate the product, brand by brand.
Anyway, they’ll have their hands full. Old Navy is launching a beauty line this fall. The big Gap beauty relaunch, which I already
told you about, comes next year. For Krakoff and Parsons, there is also an opportunity to develop a nearly new category. All the brands have dabbled in handbags (and occasionally shoes), but not meaningfully.
Will it work? The skepticism around Gap Inc. C.E.O. Richard Dickson’s big hires has less to do with his taste in executives than the
vagueness of their roles and responsibilities. Posen, for instance, seems to be settling into work at the Gap brand with the launch of the Studio collection, but he still works across the businesses in different capacities. (He recently developed a handbag line at Old Navy.) It can feel a bit nebulous for the brand-specific teams. Of course, none of this would matter if it was all being orchestrated behind the scenes. But Dickson, who made his own headlines this week by
inexplicably writing a LinkedIn entry connecting the assassination of Charlie Kirk to an internal program, clearly believes in the attention economy.
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Now on to the main event… |
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As Saks Global C.E.O. Marc Metrick tries to kiss and make up with brand partners, there’s
familiar griping about payments, anxieties about the future, and a growing awareness that everyone needs everyone else as Q4 beckons. Meanwhile, what is Richard Baker up to? |
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During my week and change in New York, the conversation often led back to Saks Global. Would the company,
many wondered, file for Chapter 11 bankruptcy protection—or worse, Chapter 7 liquidation—by January? Or was it too big to fail? And then there were the expected and occasionally high-pitched gripes. After all, C.E.O. Marc Metrick had recently sent a saccharine note to partner brands on September 10 titled “Kicking Off Fall at Saks Global,” which touted its new mantra (“The Art of You”), laid out the go-forward vision for the group, and linked to a customer
survey. Sure, that’s his job and conducting some form of business as usual is required to exit this mess. But I subsequently received several frustrated emails. “What a joke,” one of the recipients wrote to me. “Pay your vendors.”
Indeed, while Saks Global is paying brands, there are still multiple vendors that claim they have not received money owed to them from 2024, before the merger with Neiman Marcus Group was finalized. Regarding this year’s receivables, Metrick
famously established a new cadence: Payment would take place 90 days after product shipment rather than the industry-standard 30 days. And let’s just say that many of those payments haven’t arrived exactly as scheduled, also according to multiple vendors. Some partners that have complained sufficiently, or added a lawyer to the thread, have successfully
received an “escalated payments” email. |
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A MESSAGE FROM OUR SPONSOR |
JEWELRY AS HIGH ART
David Yurman High Jewelry is the
pinnacle of the House’s creative expression and artistry, marrying form and color with exceptional craftsmanship for modern collectors.
The Liberty collection evokes the spirit of New York City’s iconic skyline. Bespoke-cut diamonds and luminous emeralds are hand-set in white gold, radiating icy perfection like the Statue of Liberty’s crown.
Book a private appointment: concierge@davidyurman.com
EXPLORE DAVID YURMAN |
|
|
For the most part, though, brands are simply clenching their teeth and hoping for the best during these
challenging times. Many of the brands jostling with Saks Global were also owed money by Ssense, which recently filed for the Canadian equivalent of Chapter 11 bankruptcy protection. Ditto Luisaviaroma, which did the same in Europe. Now the lucky ones will get to take up the fights with their insurance agencies.
A group of Saks Global creditors could petition to force a bankruptcy, but no one wants to do that—they want to recover some of what they are owed. Meanwhile, these
negotiations are becoming animated. Spurned brands that have threatened to withhold future shipments have been met by stiff resistance. According to multiple sources at brands with direct knowledge of the conversations, Saks executives have told some brands that they won’t pay their 2024 receivables unless they ship their goods, presumably in line with existing contracts. (A rep for Saks Global said that is “categorically false,” adding that the company is “committed to paying brands regardless
of whether we continue to work together in the future” and is “meeting all of our monthly payment plan commitments on our pre-January 1, 2025, balances.”)
And yet, all this spousal bickering merely underscores the fraught reality: Brands large and small need Saks Global receipts to hit their 2025 revenue goals. For many brands, Saks Global accounts for a quarter, or sometimes half—or more—of their business. Maybe it is too big to fail, after all. |
The variable here remains Richard Baker, the real estate scion
and chairman of Saks Global, who has made a fortune trading buildings. In 2019, remember, he offloaded the Lord & Taylor Building to WeWork for $850 million. Could he sell off enough real estate to pay down the billions that Saks owes its creditors? Or move other assets?
This week, there was significant speculation around Bergdorf Goodman, in particular. If Baker needed to offload something, Bergdorf arguably offers the simplest carve-out. It may be the crown jewel in the Saks Global
empire, but it’s being run by a team separate from Neiman Marcus and Saks Fifth Avenue, and it’s the most coveted asset both from a real estate and a brand equity perspective. I’ve written extensively in the past about the specter of LVMH buying Bergdorf’s and treating it like it does Le Bon Marché.
Of course, such a deal would be tricky to pull
off—although not impossible. The namesake Goodman family still owns the land that the original building—754 Fifth Avenue, between 57th and 58th streets—sits on, and they have an agreement to lease the building to Saks Global until 2050. That agreement stipulates that the family not only be paid rent, but also a percentage of annual profits from the store’s sales.
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It’s a pretty lucrative deal. However, there’s a price for everything, and many have wondered whether the
Goodman family could be convinced to enter into a multiparty agreement that includes a major developer, like Vornado. There are several scenarios that could play out: What if Baker is bought out of the 2050 lease and some of the Bergdorf floors are converted into luxury condominiums? While the building, a former Vanderbilt mansion, became a designated landmark in 2016, one could build on top, because buildings in that area are zoned to scale further; they would just have to cantilever
the roof so as to not alter the facade. Saks could make hundreds of millions of dollars that could go toward bringing down the debt load, and the Goodmans could finally detach their fortunes from a declining department store business.
Saks Global, for its part, says that there are no talks to exit the Bergdorf Goodman lease, and any speculation to the contrary is pure fiction. But while it may sound far-fetched—and to some, a travesty—it’s not out of the realm of possibility. No matter
how much Baker wants to be the king of luxury department stores, his real stock-in-trade is developing outdoor shopping centers. He will do what it takes not to lose. |
Mark Guiducci announced a slew of new hires at Vanity Fair this afternoon. The
headlines will be about the mag’s new West Coast editor, Olivia Nuzzi, who parted ways with New York magazine after the R.F.K. Jr. drama, but you all may be more interested to know that Jennifer Pastore, a well-regarded photo editor and creative director and longtime visuals partner to Kristina O’Neill (first at WSJ., then at Sotheby’s) is joining as global creative director. (The salary range for the
position was, by the way, $220,000-$275,000. I would assume and hope she received more.) Lindsey Underwood, a Style editor at The Washington Post, will be a senior editor. One fun note is that Guiducci hired a social media person from Saturday Night Live.
[Vanity Fair]
Hermès won the class-action lawsuit claiming that the company violated U.S. antitrust law by allegedly limiting who could buy Hermès bags.
Eriq Gardner, Puck’s legal eagle, told me that the “judge
had a hard time buying that there was a market defined as ‘elitist luxury handbags in the United States.’” Without a market, he added, “There’s no power to wield. Nothing Hermès did was, per se, illegal.” As the judge stated, “It may be, as plaintiffs suggest, that Hermès reserves the Birkin bag for its highest-paying customers, but that in itself is not an antitrust violation.”
[Reuters]
10 Magazine is 25 years old. Collect all 11 covers! [10 USA]
Howard Lutnick, the U.S. Commerce secretary and Trump advisor
on tariffs, has enlisted his real estate firm, Newmark, to sell the endlessly charming, endlessly run-down Pierre Hotel—where he lives in the penthouse—to the Khashoggi family (relatives of murdered journalist Jamal Khashoggi). There’s a contract out to the Dorchester Collection (owned by the Sultan of Brunei) to manage it. The Pierre is a rare mix of co-op apartment owners and short-term stay, and many of the building’s most famous
tenants, including Michael Eisner and fam and Tory Burch, will likely have to exit if the sale goes through. What a story! [New York Times]
Hailey Bieber is the latest supermodel to front a campaign for Chase Sapphire Reserve. (Remember, Claudia Schiffer was first.) I find the supersized
credit cards, carried awkwardly by the campaign stars like a clutch, intriguing. [Adweek]
Sotheby’s will auction the late Esteé Lauder executive Leonard Lauder’s approximately $400 million, 55-lot art collection on November 18. It includes a Gustav Klimt painting estimated to sell for $150
million. [Puck]
The visuals here are stressing me out. [New York Times]
Sade as a style guide.
[The Financial Times] |
Until tomorrow,
Lauren
P.S.: We use affiliate links because we are a business. We may make
a couple bucks off them. |
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