HBC and Insight Partners to Establish Saks OFF 5TH Standalone Digital Business

• Raises $200 million led by Insight Partners, valuing Saks OFF 5TH ecommerce business at approximately $1 billion

• Partnership positions Saks OFF 5TH as preeminent digitally native luxury off-price retailer

• Paige Thomas to serve as President and CEO and Board Member of new entity

HBC and leading growth capital investor, Insight Partners, have entered into a partnership to establish Saks OFF 5TH’s ecommerce business as a standalone entity. Insight Partners has led a $200 million equity investment in Saks OFF 5TH’s ecommerce business, valuing the company at approximately $1 billion. Saks OFF 5TH’s store fleet, consisting of 105 locations across the U.S. and Canada, will be a separate entity, referred to as O5, and remain wholly owned by HBC.

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HBC’s Governor, Executive Chairman and CEO, Richard Baker, said “With a unique market position and on the heels of explosive growth, we are excited to establish Saks OFF 5TH as the preeminent digitally native luxury off-price retailer. As a true off-price business with a superior merchandise offering, Saks OFF 5TH has a significant opportunity to capture additional market share by further expanding its digital capabilities. We are pleased to once again work with Insight Partners on this transaction as they offer unmatched guidance and leadership in the digital space. At HBC, we remain focused on identifying value within our assets and this transaction is a prime example of how we are successfully executing on this strategy.”

Paige Thomas has been appointed President and CEO of the new digitally native Saks OFF 5TH business. Ms. Thomas will also serve as a member of the Board. In this position, she will guide the future direction of the business and focus investments on enhancing omnichannel capabilities, including fulfillment and logistics improvements, supporting infrastructure and delivering a best-in-class customer experience across all channels.

Baker continued, “Under Paige’s leadership, Saks OFF 5TH has a clear runway ahead. She took the helm just a month before the pandemic and has successfully led the business through a most challenging period, while driving ecommerce growth and enhancing product mix and brand availability. With strong management and a proven operating model in place, I’m confident Paige and her team will continue to accelerate Saks OFF 5TH’s growth and leading position in the off-price market.”

Ms. Thomas commented, “There is significant untapped potential within Saks OFF 5TH’s digital business and with the right investments to support our overall customer experience we will drive exponential growth. Saks OFF 5TH provides a compelling assortment of brands to fashion-seeking customers at the best prices. We will continue to deliver on our brand promise, while introducing an elevated experience through improved digital capabilities, new partnerships and an expanded product offering.”

Insight Partners’ Managing Director, Deven Parekh said, “There is a category-making growth opportunity within luxury off-price, and we believe Saks OFF 5TH has carved out a differentiated position in an underserved market. We’ve been consistently impressed by the Saks OFF 5TH management team and their focus on developing an unparalleled ecommerce experience. We look forward to working with HBC on this new partnership as they continue to build on Saks OFF 5TH’s momentum and growth trajectory.”

Rob Brooks, who previously served as Chief Customer Officer for Saks OFF 5TH, has been named President of O5. O5 will operate the brick and mortar Saks OFF 5TH stores business similar to a franchise model. Mr. Brooks will report directly to Mr. Baker and lead a dedicated team responsible for supporting and further enhancing the overall omnichannel experience. Marketing and merchandising will be led by Saks OFF 5TH for both businesses to deliver a cohesive experience as the customer-facing brand will not change. Stores will continue to be an integral customer touchpoint for the brand. Returns, exchanges and SaksFirst credit cards will continue to be accepted both online and in stores.

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Ms. Thomas continued, “Rob has been a true partner to me and instrumental in guiding Saks OFF 5TH through the pandemic, ensuring our customers are at the center of our decision making. I look forward to continuing this collaboration as we ensure a cohesive approach for our customers across our stores and digital businesses to deliver a strong omni experience.”

Insight Partners is joining other significant investors in HBC and Saks OFF 5TH, including Rhône and its affiliates, a leading investor in HBC since 2017.

Franz-Ferdinand Buerstedde, Managing Director, Rhône and HBC Board Member, said, “This is another major step in our partnership with Richard Baker at HBC, and Insight Partners. Paige Thomas and her team at Saks OFF 5TH have done an incredible job of reimagining and transforming the business into the premier off-price destination for designer fashion, both through its thriving digital platform and its retail stores. The changes announced today will give the business the capital, additional expertise and resources to drive continued growth.”

Advisors

Morgan Stanley & Co. LLC served as HBC’s placement agent for the transaction.

Ropes & Gray LLP and Stikeman Elliott LLP served as legal advisors to HBC.

District Capital Partners served as financial advisor and Willkie Farr & Gallagher LLP served as legal advisor to Insight Partners.