The news: Saks Global is in talks to sell a 49% stake in luxury department store Bergdorf Goodman for about $1 billion, per The Wall Street Journal.

The money will be used to pay down the company’s debt, which ballooned following its $2.7 billion acquisition of Bergdorf parent company Neiman Marcus.

A risky deal: Saks Global’s struggles call into question the wisdom of the Neiman Marcus acquisition. The deal was supposed to create a department store giant with more negotiating power with vendors and lower costs. Instead, Saks has lost ground to competitors and been forced to resort to complicated financial maneuvers to manage its debts.

Whatever buying power Saks gained has been offset by its continued inability to pay its vendors on time—even after giving itself three times longer than the industry standard to compensate brands.

• The lack of credit means Saks has to prepay for goods, further straining its resources and slowing the flow of new products to its stores.
• Saks’ supplier count has fallen by the hundreds, partly from its own weeding but also due to vendors’ attempts to cut their losses, per WWD.

Our take: Selling nearly half of Bergdorf Goodman to an outside investor could ease Saks Global’s liquidity pressures, but it doesn’t address the bigger challenge: The retailer lacks a compelling strategy for growth.

• The company has not articulated how it will differentiate its department store banners so that they do not compete directly, which is the case in about a dozen markets.
• One option is to keep Neiman Marcus’ and Bergdorf Goodman’s ultra-luxury focus, while positioning Saks Fifth Avenue as a more accessible destination for designer goods.
• But that would require the company to overhaul its merchandising strategy and invest heavily in marketing to educate shoppers—further burdening Saks’ stretched finances.

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