A downturn in luxury retail that began in early 2025 has continued this week, affecting major retailers. Stores have closed and some companies have sought bankruptcy protection.
Lugano Diamonds and Jewelry filed for Chapter 11 bankruptcy in November 2025, aiming for a sale to Enhanced Retail Funding. In December 2025, footwear manufacturer Palm Beach Sandal Company, founded in the 1960s and once worn by former First Lady Jacqueline Kennedy, also filed for Chapter 11 to reorganize.
Global consultancy Bain & Company stated in June 2025 that the downturn is impacting luxury sectors worldwide. "Worldwide luxury spending, historically sensitive to uncertainty, is coming under intensified pressure as luxury consumers’ confidence is eroded by current economic upheavals, geopolitical and trade tensions, currency fluctuations, and financial market volatility, today’s report warns," Bain wrote. "This is despite a relatively upbeat end to 2024 for the luxury sector, bolstered by a double-digit rise in tax-free spending in Europe, as well as decreased U.S. market volatility at the time."
The statement added, "Luxury brands are contending with not only weakening consumer sentiment but also a growing disillusionment with their offerings among younger generations, notably Generation Z."
The economic downturn extended into 2026 with a major bankruptcy filing. Luxury retail chain Saks Fifth Avenue's parent company filed for Chapter 11 bankruptcy. Court filings indicate the company faced severe liquidity constraints that prevented paying bills and acquiring inventory to meet customer demand.
Saks Global Enterprises LLC and 112 affiliates filed petitions on Jan. 13 and 14, listing $1 billion to $10 billion in assets and liabilities. According to a declaration from Chief Restructuring Officer Mark Weinsten of Berkeley Research Group LLC, Saks faced immediate liquidity challenges after its $2.7 billion acquisition of Neiman Marcus in 2024, as its capital structure became unsustainable. The company's liquidity position became constrained, making timely vendor payments difficult.
Court filings show the debtor listed $3.4 billion in funded debt obligations. The top 10 unsecured creditors include Chanel Limited, owed over $136 million; Kering S.A., owed over $59 million; Rosen-X, owed over $41 million; Capri Holdings Ltd., owed over $33 million; Mayhoola LLC, owed over $33 million; PriceWaterhouseCoopers, owed over $30 million; Compagnie Financiere Richemont SA, owed over $30 million; Ermenegildo Zegna N.V., owed over $26 million; LVMH Moet Hennessy Louis Vuitton SE, owed over $25 million; and Akris Inc., owed over $23 million.
A company statement said the debtor will seek approval for up to $1 billion in new money, debtor-in-possession financing from an ad hoc group of Saks Global's senior secured bondholders to fund the bankruptcy case. The ad hoc group will also fund a $500 million exit loan facility, and the company secured about $240 million in incremental liquidity from its asset-based lenders. Court filings indicate the debtor arranged new liquidity through three DIP loans totaling $5.85 billion, including roll-ups of prepetition debt.
Saks Global operates 33 Saks Fifth Avenue, 81 Saks Off 5th, 36 Neiman Marcus, 2 Bergdorf Goodman, and 5 Last Call stores. It also operates Saks Off 5th Digital and Horchow home furnishings e-commerce businesses. The company employs 14,610 full-time and 2,220 part-time workers.
According to a report from TheStreet's Daniel Kline, several of Saks' vendors filed lawsuits against the company seeking payments for inventory provided over the last three years.
Ragini Bhalla, head of brand and spokesperson for credit report provider Creditsafe, said in a statement, "Saks Inc. had a persistent and troubling pattern of paying vendors late in 2025, pointing to sustained liquidity problems." Bhalla added, "Towards the second half of 2025, Saks appeared to be managing its cash flow by deferring payables."
Data from Creditsafe shows a growing number of Saks’ bills fell into the delinquent category of 91 or more days late between July and December 2025, with 16.43% in July, 24.46% in October, 45.33% in November, and 47.84% in December. "And given that Saks also missed debt payments and filed for bankruptcy, it increases the likelihood that some vendors may never get paid for work completed or orders fulfilled," Bhalla said.