This Valentine’s Day, Saks Global CEO Mark Metrick sent a letter out to around 2,000 brands sold at their stores. It was not a love letter.

In fact, the promises in this particular letter may have soured the company’s already-rocky relationships with their vendors. For those not in the know, Saks Global (formerly Hudson Bay Company), owner of Saks 5th Avenue, purchased Neiman Marcus late last year. The move resulted in one company owning Saks 5th Avenue, Bergdorf Goodman, Neiman Marcus, and all associated off-price outlets.

I’ve written more about what the acquisition could mean for the future of luxury department stores here, but to summarize, Saks Global gained greater bargaining power and more liquidity. If you’ve ever felt guilty over buying a little treat while you still have debt, don’t sweat it, because Saks bought a whole company while still owing payments to a couple thousand of their vendors.

Which brings us back to the Valentine’s Day letter. CEO Mark Metrick told vendors that the company plans to pay back all unpaid bills. Hooray! But let’s not run off into the sunset just yet - there’s a few more details. The plan outlined by Metrick told vendors it will take over a year to pay back what’s owed, with past due balances to be paid in 12 monthly installments starting July 2025. There’s more - going forward, Saks Global committed to paying vendors on net-90 terms. That means that vendors can expect payment 90 days from the receipt of goods. For context, prior to the acquisition, Neiman Marcus paid vendors on a prompt net-30 schedule. Business of Fashion’s Imran Amed stated this new standard would make “operating a sustainable fashion business nearly impossible”.

Since Saks Global now owns several of the top luxury department stores in the US, brands have little room to negotiate, and the company seems to be adopting a take-it-or-leave-it approach. In response to backlash surrounding his letter, Metrick stated:

“For a year and a half I heard, ‘We just need clarity. And so I sent a letter and I said here’s what’s going on. But I have a business to run. Customers to satisfy … If this is not enough clarity, or if you don’t like this, then tell me so I can fill your space with other stuff.”

There’s a clear power imbalance here, where brands that rely on timely payments are kept waiting by a company that does $10 billion in combined revenue. When the acquisition was first announced, it seemed logical that, since the company had been able to raise billions for the purchase and claimed to be more liquid, the new Saks Global would want to repair vendor relationships as part of their mission to “redefine the luxury shopping experience.” Instead, Neiman Marcus Group-owned stores that had previously been reliable also began to delay payments after being acquired.

It’s easy to say that brands who don’t like the new terms should just walk away, and some of them have, but the truth is, brands need department stores. They rely on them. With Saks Global controlling so many of the top stores, brands don’t have a lot of alternatives for wholesale. There’s still Nordstroms and Bloomingdales, as well as smaller boutique and e-commerce outlets, but Neimans, Saks, and Bergdorfs are big accounts. Eveningwear designer Cyril Verdavainne, who sells to Saks through trunk shows, explained his perspective in an interview with WWD. “Our payment terms were 30 days, and then they became 90 days.…It’s frustrating, but it’s the cost of doing business with department stores. Could it be fairer? Sure. Do I want to abandon my Saks Fifth Avenue clients, who can’t fly to New York for a custom dress? Of course not. So what do you do? Well, you open a line of credit, hire a factor, and hope for the best.”

Small designers are especially impacted when they aren’t paid on time, because they don’t have the financial overhead to continue to produce and pay their own bills without reliable cash flow. One annonymous New York designer told WWD that they made the decision to stop selling to Saks last spring, despite the retailer being their biggest wholesale account. He explained that Hilldun (a fashion-financing firm) would not accept the Saks account “since they were not only not paying, but [they were] also taking unauthorized discounts. It was the reason I quickly had to find a retail location in New York City and opened my boutique last May.”

Another brand who was owed $100,000 shared with BOF that they had to take out a commercial bank loan for the first time while waiting on payment (they have since been paid most but not all of the balance). Essentially, that means that the brand had to pay interest for the privilege of waiting to be paid by Saks, who most certainly isn’t paying brands an interest on their late payments. The designer pulled out of Saks after the experience, and is now having to consider pulling out of Neimans and Bergdorfs as well.

The thing is, even though Saks Global has more power in the situation, they still need brands. This is a symbiotic relationship, and if the brands are suffering, the department store is going to feel the sting as well. Saks Global needs covetable, exciting items that will draw customers into their stores. That’s not going to happen when brand relationships are faltering. Without product, a department store is nothing but real estate.