Saks in Crisis
What happened: Saks Global missed a $100 million interest payment due at the end of December, and is now in negotiations with creditors to provide $1 billion in financing to continue operating in bankruptcy. Longtime CEO Marc Metrick stepped down on Jan. 2.
A long time coming: The fashion industry has feared this was coming almost from the moment Saks’ owner acquired Neiman Marcus and Bergdorf Goodman a year ago. The deal was premised on leveraging the combined companies’ scale to address the many problems facing American department stores. Instead, Saks Global spent most of 2025 negotiating and renegotiating with counterparties, whether it was a payment plan for vendors in February or securing new financing from lenders in August.
Desperate measures: The priority in bankruptcy would be reaching a new agreement with creditors, and/or finding a new owner or investors capable of untangling Saks’ troubled finances.
Richard Baker, the real estate mogul and serial dealmaker who put the Saks-Neiman deal together, took over as CEO from Metrick on Friday, about as clear a signal as you can get of where things are headed.
Selling off more of Saks’ considerable real estate holdings is the quickest path to reduce debt, though the track record for retailers that have gone this route – including Sears and Lord & Taylor – isn’t good. Still, it may be easier than finding a new owner willing to take on a struggling department store operator with sales in double-digit decline and billions of dollars owed to banks and vendors.
Collateral damage: For some brands, a Saks bankruptcy is an extinction level event. When Matches entered administration in early 2024 and shut down a few months later, vendors lost out on payment for inventory held by the retailer, and some went under. Saks is many times larger, and plays a central role in brands’ US wholesale strategies in a way Matches never did. The inventory it holds and the payments it owes will be consequential for luxury brands already facing a tough environment.
Even so, the decision to walk away isn’t easy, particularly for brands that don’t have their own stores or big marketing budgets. Many labels will stop shipments to Saks until the company’s future is clearer, but some will have little choice but to roll the dice and hope they get paid eventually.
Scale may not save Saks from bankruptcy, but it may be the only thing keeping stores stocked while the process plays out.
The Battle for Lululemon
What happened: On Dec. 11, Lululemon said chief executive Calvin McDonald would step down and that the company was searching for a successor. Outsiders, including founder Chip Wilson and activist investor Elliott Investment Management, have some ideas.
Opening moves: Elliott disclosed last month that it had amassed a more than $1 billion stake in the activewear brand, and put forward ex-Ralph Lauren executive Jane Nielsen for the CEO role. Wilson, who hasn’t had a formal role at Lululemon for a decade but remains one of its biggest shareholders, nominated three board members, launching a proxy fight to steer the company’s future.
Time for a change: Few would argue Lululemon needs a new direction. Growth has slowed markedly. Sales are in retreat in North America, where competitors like Vuori and Alo Yoga, promising a fresher take on workout and athleisure wear, are now firmly established in A-tier malls and premium sports retailers.
Wilson’s proxy fight comes after months of taking potshots from the outside, including a full-page Wall Street Journal ad. That ad’s talk of a “loss of cool” after putting the company in the hands of operators who “speak Wall Street” echoes the situation at Nike, another sportswear behemoth that is struggling with dull product and new challengers. The swoosh installed veteran insider Elliott Hill as CEO; he promised to put sports first and take Nike “back to its roots.”
Easier said than done: Perhaps Lululemon will do the same. But though Hill’s message was well received, the turnaround itself has been slow going. There have been multiple executive restructurings and many months of clearing out old inventory with painful discounts. The sports-first strategy will require nearly two years to roll out in full, and probably years beyond that to turn new products into world-conquering champions.
Lululemon’s task is both easier and harder — its narrower focus on athleisure gives it a more straightforward path to rehabilitate its image. But it must also seize back the initiative in a category it may have invented, but where consumer interest is captured by whatever’s trending on TikTok.
A Christmas Miracle
What happened: American shoppers splurged over the holidays, with Mastercard reporting a 4 percent increase in spending. The US economy as a whole grew by 4.3 percent in the third quarter, also topping expectations.
Holiday cheer: Robust holiday spending has at least temporarily put to rest the idea that tariffs or general economic uncertainty will cause American consumers to pull back. Survey after survey shows consumer sentiment at historic lows, but that bleak outlook has yet to show up in shopping habits. This stands in contrast to China, the UK and the EU, where retail performance has been more uneven.
Who’s still shopping: Fashion retailers can take the win this holiday season, but need to be on their guard. What’s happening in the US is widely referred to as a “K-shaped” economy, where wealthy consumers’ surging stock portfolios give them the confidence to keep spending, while poorer Americans feel the squeeze of rising prices and a stagnant job market.
This dynamic can go on for some time, but carries its own risks. Namely, it reduces the number of levers retailers can pull to roll with whatever the global economy throws at them. With low-income shoppers off the board, brands are one burst AI bubble or S&P 500 wobble away from losing a big portion of their remaining customers.
The 2026 outlook: There’s little sign of that worst-case scenario emerging in the short term. Retailers may soon get a boost from the removal of tariffs, if the US Supreme Court rules their way. And wealthy shoppers are getting a windfall this year as more tax breaks from the Big Beautiful Bill kick in. Those developments will have to be weighed against whatever uncertainty and disruption 2026 has in store.
The GLP-1 Era
What happened: The US Food and Drug Administration approved the first GLP-1 pill for weight loss, for Novo Nordisk’s Wegovy.
Newly accessible: If you thought 2025 was the year GLP-1s went mainstream, buckle up. The next wave of drugs will be an easier pill to swallow, pun intended, than the weekly injections currently on the market. The Trump administration in November also announced a deal with drugmakers to lower the cost of GLP-1s.
Sizing down: The rise of weight-loss drugs is already remaking the food industry, with snack brands introducing higher-protein, smaller-portion options. The fashion industry also needs to factor the GLP-1 effect into its plans. The biggest question is how to approach sizing; thinking around what quantities to order usually evolves over years or decades. In 2026, brands will need to be attuned to rapid changes in demand for particular sizes if a large share of consumers are simultaneously experiencing rapid weight loss.
While there is anecdotal evidence that some retailers are already stocking less extended-size inventory, the GLP-1 response isn’t as simple as a one-for-one swapping out of 2XL for M. As the owner of a plus-size clothing line told CNBC last year, “it just changes where demand sits.” In other words, people will shop for new sizes, but across nearly the same range as before.
A global experiment: It will take plenty of trial and error to get this one right, especially when there’s little data on how mass use of GLP-1s will affect shopping preferences over the long term. It’s a good use for artificial intelligence, and not just in demand forecasting. Virtual try-on services, still a niche even as these tools gain powers through AI, could see demand from consumers figuring out how to dress for their new shape.
