Going-out-of-business sales begin for legendary Saks Off 5th online after facing unusual breakup

THE digital operations of the legendary off-price Saks Off 5th brand are being dismantled with going-out-of-business sales now underway.

The liquidation of the e-commerce giant comes years after Saks Off 5th Digital’s unusual split from the brick-and-mortar arm.

A bankruptcy court has officially approved the liquidation of the discount online unit, with Saks Off 5th Digital to hire a liquidator and sell its inventory separately from the rest of the luxury retailer.

Shoppers can score discounts up to 85% off, with some categories even deeper, according to an Instagram post about the liquidation.

The assets sale does not include any merchandise of Saks Global’s physical stores, bankruptcy attorney Michael K. Riordan said in court Friday morning.

Because Saks Off 5th Digital may owe money to its parent company, an independent manager and chief restructuring officer, Andrew Hede, was hired to supervise the bankruptcy case.

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The liquidation will undo part of the unusual breakup of Saks’ online and brick-and-mortar retail operations in 2021.

At the time, Saks Fifth Avenue established e-commerce operations for both its full-line Saks Fifth Avenue and its off-price Saks Off 5th banner.

The two digital units are now part of the Saks Global Chapter 11 bankruptcy process that began January 14.

Saks Global owns 80% of the Saks Off 5th Digital business, with the remaining 20% owned by outside investors, including private equity fund Insight Partners, according to court documents.

When Saks Off 5th’s offline and online entities split, Insight Partners led a $200 million investment in the e-commerce arm.

The goal of the separations was to lure talent and make money off of the shift to online shopping brought about by the COVID-19 pandemic, Hede told the court.

How does bankruptcy work?

Bankruptcy is a specific legal process that helps companies eliminate debt they can’t repay.

The process allows businesses to start fresh and gain access to new credit.

Supervised by federal courts, bankruptcies allow a company to sell off its assets more easily to pay off creditors, according to Investopedia.

Chapter 11, a common process for companies, is used to restructure a business with the goal of remaining open – even if it means selling off most of the company’s properties.

Chapter 7, on the other hand, sells all of a company’s assets, putting it out of business.

Chapter 15, alternatively, allows for collaboration between American and foreign courts to conduct bankruptcy proceedings with “parties of interest involving more than one country,” per the United States Courts.

However, as many retail experts cautioned in 2021, Saks Off 5th Digital did not see as much success as hoped, struggling with high marketing costs and low returns.

“The SO5 Digital Debtors made substantial investments in the infrastructure to operate an e-commerce business, and additionally incurred substantial expenses towards digital marketing, for example, which have not led to the anticipated return on investment,” said Hede.

Looking at the liquidation on its own, it does not indicate much about the online and offline businesses, especially because consumers tend to shop off-price in stores rather than online, GlobalData Managing Director Neil Saunders told Retail Dive.

Because of this, the expert guessed that Saks Off 5th Digital was probably quite fragile.

Retail Apocalypse: brick-and-mortar struggles

The “retail apocalypse” began in the 2010s and accelerated during the pandemic due to factors like the rise of e-commerce, shifting consumer habits, and the effects of the 2008 financial crisis, all pushing mass brick-and-mortar closures and bankruptcies.

At the start of last year, experts estimated 15,000 store closures in 2025 – more than double 2024’s numbers and the highest number seen since the pandemic.

A number of retail giants shut down stores in 2025, including:

• Department stores: Macy’s, JCPenney, Kohl’s, Nordstrom, Saks Fifth Avenue/Saks Off 5th
• Specialty and craft stores: Joann, Party City, Claire’s
• Drugstores: Walgreens, CVS, Rite Aid
• Apparel stores: Forever 21, Foot Locker, Carter’s, Gap, REI
• Groceries and home goods: Big Lots, Dollar General, Family Dollar, Kroger, American Signature, At Home
• Electronics and entertainment: GameStop, Best Buy, Regal Cinemas

Retail experts anticipate a continued wave of shutdowns in 2026 as businesses adapt to shifting consumer behavior, optimize their store footprints, and address economic headwinds.

Several companies have already announced store closures for this year, many of which are a continuation of 2025’s closure efforts, including:

• Macy’s
• Kroger
• Yankee Candle
• Saks off 5th
• REI
• Walgreens
• GameStop
• Carter’s
• Foot Locker

“The root cause of the failure here is that parent group, Saks Global, has dragged all its divisions into the mire because of its huge debts,” said Saunders.

“Saks Off Fifth Digital is likely liquidating as it is technically a stand-alone division and is one of the weakest parts of the group with little viability.”

The unusual split between online and brick-and-mortar do reflect “a wider pattern of game playing with finances that has been a hallmark of Saks Global” and may have resulted in an under-investment in physical stores, said the retail expert.

“It will be interesting to see how much money has been lost.”

Saks Global filed for bankruptcy in mid-January after months of rumors, citing a high debt load of at least $3.4 billion and lack of cash, making it tough for the company to keep stores stocked with luxury goods.

Last November, a few weeks prior to the Chapter 11 filing, Saks Global revealed it would close nine Saks Off 5th stores.

During the bankruptcy process, Saks Fifth Avenue, Neiman Marcus, Bergdorf Goodman, and Saks Off 5th stores will remain open.