The e-commerce side of Saks Off 5th, the off-price luxury chain, will be split off from its bricks-and-mortar stores in a deal that values the fast-growing, discount luxury site at $1 billion, the company said on Monday.
Venture capital firm Insight Partners took a $200 million minority stake in the digital business under the deal, whose terms were not disclosed.
Just a few months after engineering the same deal with Saks Fifth Avenue, which spun off its digital business, HBC — the owner of both brands — said sales at the e-commerce arm of the off-price retailer have grown by 100 percent year to date compared to 2019.
Insight Partners also invested $500 million into the e-commerce business of Saks Fifth Avenue, becoming a minority investor in that company, which just named NBA superstar James Harden to its board of directors.
Splitting off the digital arms of these retail businesses allows HBC to increase its investment in the fastest growing part of its business, the company said.
“Over the last year, online companies tripled in market valuation,” HBC’s executive chairman and chief executive, Richard Baker told The Post. “We don’t want to be left behind. We are a fast-growing, billion-dollar tech company now.”
Saks Off 5th Chief Executive Paige Thomas, who joined the company a month before the pandemic hit, is leading the digital business. The 105 Saks Off 5th bricks and mortar stores will be headed up by Rob Brooks, who served as chief customer officer for the company.
“By breaking the businesses apart,” Thomas told The Post, “it allows for significant talent acquisition. We have hired some individuals and we have some in the pipeline.”
“The spinoff also allows us to double our investment in marketing, social media and search optimization,” Baker added.
Customers are unlikely to notice a difference in how the companies are run, the executives said.
They can still buy items online and return items to the stores.
The money Insight Partners has invested in both Saks brands will help the companies invest in faster shipping, easier returns and better customer service.
HBC was taken private last year by a group of shareholders that includes Baker. HBC also owns the Hudson’s Bay department store chain in Canada. Insight Partners’ other investments include e-commerce platform Shopify, social media site Twitter and subscription meal kit service Hello Fresh.