All retailers have to finally address the core problem: too many products presented in too many locations chasing a finite set of consumers who want what they have to offer in terms of service and selection and at prices that can sustain the organization. This merger makes a lot of sense. Yes, both own Boomers and not Millennials but there is still value in the experience both offer. Closing stores catering to the same market that are too close to each other also makes sense. As to design, I would tip my hat to Saks and their bold initiatives to reinvent the flagship in NYC as a way forward to attract younger consumers.

Only if they both want to survive. I always thought it was a shame to have lost all the individual personalities of the many regional department stores. But I’m not sure the math would have worked if they all had stayed independent. Isn’t it possible to both consolidate AND regionalize? My Macy’s was tiny step in the right direction, but it never really got traction.

You are starting to see that in food delivery, so this is not a stretch, however the problem still will be there – people are not spending on clothing, jewelry, etc. and the old on-hand customer service touches both are known for will no longer work in our current condition. This will come back when there is a solution, but can both hang on until then? Definitely risky…

The debt is the primary problem for Neiman Marcus. It is absurdly high and crippling. Come what may it needs to be addressed and restructured. That may be painful or uncomfortable for creditors but that’s tough; lending is a risk, and the risk with Neiman Marcus was as plain as day!

Once the debt is sorted, some kind of merger with Saks is a possibility. The market doesn’t need two luxury department stores and so consolidation would, in many ways, allow this reduced demand to be addressed. There would be a lot of things to work through – not least branding and positioning – but the idea has some merit.

Given the similarities in their value propositions, overlapping physical store footprint, potential operating synergies and the need to take capacity out of the market to allow for reasonable financial returns, absolutely. And I say this having looked at this before as both an executive at Neiman’s and as a consultant.

The Mudrick analysis on store closings is overly simplistic and suggests more closings than would make sense–and there are plenty of integration issues–but for both brands to survive, much less thrive, a merger is almost certainly inevitable.

I’ll have a more detailed analysis up on Forbes later today.

Maybe I missed it, but does the proposal involve keeping both nameplates alive? A new brand (like “Saks Neiman Marcus”)? Or simply a play for N-M sites? The answer to that question would help answer the bigger question of whether this is a viable move.

Meanwhile, Saks itself is struggling right now, although not to the degree of Neiman. The retail landscape has for many years been littered with the bones of weak stores who decided to merge (under a heavy debt load), so there is no guarantee of success here. Even the mighty Nordstrom is in a position where it plans to close over a dozen of its full-line stores this year.

Today’s luxury retail apparel market just doesn’t support two competing brands, especially in the same regional markets. So yes, this merger does, on the surface, make sense if the financials and debt loads can be rationalized. I don’t see how closing 22 Neiman Marcus stores is the answer, however, as I suspect there are many metro areas where both brands exist today where Neiman Marcus has more brand equity and customers than Saks and vice versa. A proper analysis market by market would need to be done to see which brand would close its doors. Consolidation like this is likely going to increase as the pandemic lingers on and shows us ongoing repercussions to retail, even as stores open back up for business in the hopes that customers will come through their doors.

This is a plan for survival not a plan to move forward. The assets of Neiman Marcus are basically worthless in dollar terms. Saks can pick up the trash for pennies and get some return for that.

However, this combination doesn’t change the long term department store trends. They only have revenue generated by department stores and it is declining. They will not create new customers or grow revenue out of thin air.

In the short-term the combination may extend the death of this entity, but in the long-term the writing remains on the wall. Unless I was a private equity fund and could guarantee my returns going in, I would not personally touch this deal with any of my investments.

Mergers tend not to work very well. Maybe this would work as a half a Neiman Marcus and a half a Saks — streamlined but not merged? I suspect that cost savings and capitalization needs will drive the merger, yes. It’s a hell of a time to try a merger. The luxury end of the market tends to be OK (as in not great, but not decimated) in a recession, as those customers seem to hang in there.

Let’s not confuse value realization for hedge funds with profitably operating a combination facing high debt levels, uncertainty around future consumer demand and timing, increased operating costs for physical stores, and changing supply chain networks. All these macro issues overlay the core merchandising decisions that have to be meticulously planned and flawlessly executed. For me this goes in the high risk, low reward quadrant.

The market is just not big enough or strong enough right now to support both these luxury retailers, so working together may be their only hope of staying afloat. There will definitely be further consolidation over the next few months as everyone tries to recover from the recent difficulties and decreased demand.