Gary Wassner, the chief executive officer of Hilldun Corp., the factoring and finance company, wrote to his clients Tuesday afternoon that Hilldun still cannot approve Saks Global orders at this time. He advised vendors to continue avoiding shipments to the retailer until further notice.
In the letter, obtained by WWD, Wassner explained that Hilldun hasn’t received any payments from Saks Global since December 19. Additionally, he has had very little correspondence with anyone at Saks Global since Chief Executive Officer Marc Metrick left late last week. “For the first time in the past two years, we are sitting here in the dark. We do not know if payments will resume,” Wassner warned.
Since Hilldun represents many vendors supplying Saks Global, Wassner emphasized the urgency of the situation. “It’s critical that we learn soon how to advise you all to proceed. And it’s critical to the future of Saks Global that we provide you with the safety net you need to begin shipping again. But at this moment in time, we are at a standstill.”
Wassner added that spring shipments to other retailers have already begun, but he has advised his clients that what they have produced for Saks Global “must remain on your shelves until Saks’ future financing is resolved.”
Speaking to WWD on Wednesday, Wassner said, “I want nothing more than to be able to approve our clients’ spring orders, so they can ship the inventory that they’ve accumulated in their warehouses for Saks Global. But until I am advised on how the company will be moving forward, I cannot do anything. My hands are tied.”
He elaborated on Hilldun’s position: “We represent over 100 brands who supply Saks Global. Until we guarantee to our clients that their invoices will be paid after they ship, they cannot take the risk of not being paid after shipping unapproved orders. We own the invoices once they are shipped, and we are paid directly by Saks Global for those invoices.”
“Many of our clients borrow from us using those shipped invoices as collateral for the loans we make to them. So until I am comfortable that a plan has been put into place that will facilitate payment by Saks according to the payment terms on the orders themselves, I cannot provide those guarantees,” Wassner explained.
As of Wednesday, Wassner said he hadn’t heard any updates from Saks.
He urged vendors to exercise patience. “For everyone’s sake, and for the health of the fashion industry in general, we hope a resolution is reached sooner rather than later. All I can suggest now is that you wait to make decisions regarding your future orders from Saks Global, as well as your current inventory, for another week to 10 days, if you can. Hopefully, we will learn something by then that will assist in our decision making.”
Wassner acknowledged the impact this situation is having on his clients’ cash flow. “I am also aware that the later your product hits the selling floors, the less likely it will achieve a full price margin. But no other options will preserve your margins now. Other retailers are hovering, but they will all expect discounted pricing,” he said.
“So sit tight if you can, and we will keep you as informed as legally possible, should Saks Global provide us with any guidance or make any major announcements,” Wassner added.
He wrote the letter in response to receiving hundreds of emails daily from concerned clients and felt that a detailed email would be a more efficient way to address the situation.
“The press is flooded with rumors of a potential bankruptcy, a sale of equity, a refinancing, a purchase by Amazon, and other possibilities. The imminent reality is that Saks must find a path forward, and we just don’t know where that path will lead the company,” Wassner wrote.
He acknowledged that most of his clients are currently sitting on unshipped inventory from the holiday and resort seasons, as well as finished and in-progress inventory meant for spring deliveries.
“The impact on both small and large brands is significant, and in some cases devastating,” he said.
Wassner expressed his desire to approve orders and allow clients to begin shipping as they had done consistently over the past 18 months, “through thick and thin.” However, until Saks Global resolves the current financial uncertainties, Hilldun remains “deadlocked.”
Despite the challenges, Wassner remains optimistic about Saks Global’s potential. “I’m still committed to the belief that Saks Global has the most opportunity of any retailer in this category. In fact, it is really the ONLY retailer fully in this category. I want it to succeed.”
He recognized that negotiations between Saks and its partners and lenders are “complicated and delicate,” which explains why details cannot be disclosed publicly.
“I am also certain that if they don’t come to a resolution soon, their chances of recovering intact become more challenging daily,” he warned.
As reported by WWD on December 9, Hilldun put Saks on the “do not approve” list due to the retailer skipping two weeks of payments. Saks has been under scrutiny for slow and past-due payments to vendors for more than a year.
Last week, Richard Baker, chairman of Saks Global, took over as CEO from Metrick shortly after the company fell behind on its debts, reportedly missing a more than $100 million interest payment on December 30.
While many consider a Saks Global bankruptcy inevitable, Baker “is known as a kind of dealmaking magician who could still pull something out of his hat,” WWD reported.
Spokespeople for Saks Global did not immediately respond to requests for comment on Wednesday afternoon.
The ongoing back-and-forth with vendors has been a persistent issue for Saks Global over the past year, involving letters to brands, reassuring calls, efforts to quell rumors, and legal proceedings.
Although no cases have yet reached a final ruling, state and federal court dockets reveal that the retailer has been actively involved in litigation related to vendor nonpayment and other allegations.
Below is a sampling of recent legal actions involving Saks Global: [Note: Details of legal cases can be inserted here as appropriate.]
https://wwd.com/business-news/retail/hillduns-gary-wassner-tells-clients-dont-ship-saks-global-1238440232/
