Akris: US Fine & Saks Bankruptcy – Swiss Label Faces Losses

Akris Navigates US Financial Hurdles and the Evolving Luxury Retail Landscape

Swiss luxury fashion label Akris, known for its understated elegance and clientele of influential women like Michelle Obama and members of the Swiss Federal Council, is facing financial headwinds in the United States. The company recently settled a dispute with US authorities over improperly obtained Covid-19 relief funds and now faces potential losses due to the bankruptcy of Saks Global, a major US luxury retailer.

The Covid-19 Relief Fund Issue

In 2021, Akris’s US subsidiary received $1.2 million in Covid-19 relief funds intended for small and medium-sized businesses. The issue arose because the subsidiary failed to disclose its affiliation with the larger, Swiss-owned Akris group. Peter Kriemler, Chairman of Akris, stated the company believed it was eligible and initially received approval from authorities. Akris repaid $1.823 million, including interest, to resolve the matter. The former American financial chief of Akris, responsible for the oversight, is no longer with the company.

Saks Global Bankruptcy and Potential Impact

The bankruptcy of Saks Global, owner of Saks Fifth Avenue and Bergdorf Goodman, poses a novel challenge for Akris. Akris is listed as a creditor, with an outstanding balance of $23.1 million. This situation is not unique to Akris; other major European luxury brands, including Chanel ($136 million) and Kering (Gucci, Bottega Veneta – $60 million), are also owed significant sums by Saks Global.

The Changing Face of Luxury Retail

The challenges faced by Akris highlight broader shifts occurring within the luxury retail sector, particularly in the US market. The traditional department store model is under pressure, forcing companies to adapt.

The Rise of E-Commerce in Luxury

Although Saks Global struggles, Akris has embraced e-commerce, with its entire collection available on the Saks websites. This proactive approach positions the brand favorably as online sales turn into increasingly important, accounting for 25-30% of revenue for Saks. This contrasts with some luxury brands that have been hesitant to fully embrace digital channels.

The Central Group Model: A Potential Path Forward

Peter Kriemler points to the model employed by Central Group, which owns Globus, as a potential solution. Central Group allows brands to manage their own sales and staffing within its stores, focusing the department store’s role on real estate and marketing. This approach could offer a more sustainable framework for luxury brands partnering with department stores.

Akris’s Strategy for the Future

Despite the current difficulties, Akris remains optimistic. The company is focused on the restructuring of Saks Global and believes the department store will continue to exist in some form. Akris also values its strong relationship with Saks and continued to supply goods even as the company faced financial difficulties.

Akris’s continued success will depend on its ability to navigate these evolving retail dynamics and maintain its appeal to a discerning clientele.