A new luxury fashion powerhouse is in the works

Macy’s is about to get a new luxury department store rival in the U.S., and it’ll be a big one.

HBC, the parent company of Saks Fifth Avenue, is buying Neiman Marcus for $2.65 billion, according to the Wall Street Journal. People familiar with the deal told the publication that boards of both firms have approved the transaction.

The combination comes after Neiman Marcus filed for bankruptcy during the pandemic and both brands have struggled to lure in wealthy shoppers and satisfy customers who are increasingly looking for bargains.

But one member of the deal has some experience with that: Amazon. Amazon is slated to take a minority stake in the new company, to be called Saks Global. It’ll be bringing its technology and logistics prowess to the entity. Salesforce is even throwing a minority stake and a bit of AI expertise into Saks Global. Both Salesforce and Amazon already work with the firms, so their integrations wouldn’t be entirely new, according to the Journal.

Financing for the transaction is coming from HBC and Apollo Global Management affiliates.

The new firm is expected to generate some $10 billion in annual sales, which is significant, but nowhere close to luxury fashion LVMH Moët Hennessy Louis Vuitton. LVMH brought in $94 billion in sales last year, according to the Journal.