The luxury retailer still has its network of stores, but the IPO talks show that ecommerce drives growth at the Hudson's Bay-owned retailer.

(Bloomberg)—Saks Fifth Avenue’s ecommerce unit is interviewing potential underwriters this week for an initial public offering that could take place in the first half of 2022, Dow Jones reported, citing people familiar with the matter.

The luxury retailer is targeting a valuation of around $6 billion, triple its worth in March, it added. Saks is owned by Hudson’s Bay Co., No. 30 in the 2021 Digital Commerce 360 Top 1000.

The planned IPO would be the second step of the agreement with investors this year after separating the ecommerce business, Dow Jones said. From a consumer perspective, not much has changed—shoppers still see a similar assortment and are able to place online orders for in-store pickup according to the Wall Street Journal. But the online division controls marketing and merchandising in both channels, with stores getting an affiliate fee for online sales that pass through the retail locations. With the IPO, things are expected to stay largely the same.

The moves highlight the significant steps retailers are taking to adapt as the world emerges from a pandemic that has reshaped consumers’ buying habits, particularly in the apparel market. It also comes as the S&P 500 Index climbed 19% this year, set for its third annual advance.

In early 2020, Hudson’s Bay Co. shareholders agreed to take the owner of Saks Fifth Avenue private after an eight-month fight that pushed the company’s chairman to sweeten his offer twice.

advertisement

The move to digital sales may be catching on with other traditional retailers. Earlier this month, activist investor Jana Partners said retail chain Macy’s Inc. (No. 13) could boost its valuation by spinning off its ecommerce business.

Jana said in an investor presentation that Macy’s could follow the lead of Saks Fifth Avenue. At a similar valuation, Macy’s online business could be worth about $14 billion, Jana said.

Favorite