Someday Neiman Marcus will be sold again or go public, and so it’s going to be the subject of Wall Street speculation now and then. But is that “monetization” day imminent?
The New York Post reported Monday that Neiman Marcus is considering a sale to Toronto-based Hudson’s Bay, the parent company of Saks Fifth Avenue, the most recent of stories from The Post speculating about the future of the Dallas-based luxury retail department store chain. The newspaper said the three owners are squabbling about a sale. A New York Post story from June, again citing unnamed sources, said Neiman Marcus was considering selling its Bergdorf Goodman brand and that the rest of the company was on the market as well.
No other publications have reported on a potential Neiman Marcus sale, although a few publications aggregated the New York Post’s report.
A Neiman Marcus spokeswoman said the retailer doesn’t comment on rumors and speculation.
Neiman Marcus has been sold three times in 15 years, including the most recent time in late 2020 out of its bankruptcy reorganization. The Dallas-based retailer has been bought and sold by big private investors for $5.1 billion in 2005 and for $6 billion in 2013, both times in burdensome leveraged buyouts. Can it do that again? Debt from its last two leveraged buyouts put it into bankruptcy along with the uncertainty of the pandemic.
Luxury is a small but influential slice of retailing. Does it make sense to consolidate and get rid of one or two of the three largest luxury department stores?
Neiman Marcus also owns Bergdorf Goodman, which is a quick few blocks north of the Saks flagship in Manhattan.
Neiman Marcus has been owned since late 2020 by some of the largest asset management companies, hedge funds and private equity firms—not entities that are hard up for cash, but this is what they do: buy and sell.
Who owns Neiman Marcus?
PIMCO is one of the largest asset management firms in the world. It manages $1.79 trillion in assets for central banks, sovereign wealth funds, pension funds, corporations, foundations and endowments and individual investors.
Davidson Kempner Capital is a New York-based global hedge fund with $38 billion in assets under management. Davidson Kempner is often listed as a secured bondholder in debt-restructuring agreements.
Sixth Street was created by TPG in 2009 as an investment platform dedicated to credit-related investments. TPG, which was one of Neiman Marcus’ private-equity owners who sold the company in 2013, separated from Sixth Street in May. Sixth Street operates independently, with $65 billion in assets under management.
London-based Farfetch made a $200 million minority equity investment in Neiman Marcus Group in May 2022.
How is Neiman Marcus performing?
The retailer is still profitable even though business moderated since the pandemic’s luxury boom. Sales and profits in its most recent fiscal third quarter are still above 2019 but down from fiscal 2022.
Debt from its last two leveraged buyouts put it into bankruptcy along with the uncertainty of the pandemic. But its balance sheet is in better shape these days.
Neiman Marcus issued $1 billion in senior secured notes in March 2021 due in 2026 to refinance its bankruptcy exit debt. That debt allowed the company to have the capacity for an additional $1.23 billion in secured debt, according to a Reorg Research report at the time.
How do the two retailers stack up?
Both companies have been privately held for a few years, so their financials aren’t disclosed, but based on estimates, Neiman Marcus is about twice as big as the Saks Fifth Avenue store division by revenue. Their store real estate overlaps in major U.S. cities. Saks Fifth Avenue doesn’t have a full-line store in Dallas-Fort Worth, but Saks Fifth Avenue and Neiman Marcus compete in most other markets.
Neiman Marcus has 36 full-line namesake stores and men’s and women’s Bergdorf Goodman stores across from each other in New York. Neiman Marcus’ online business has historically been more than 30% of total sales. Store sales staff have been given tools to sell remotely. Farfetch is in the process of working to take Bergdorf Goodman’s online business worldwide.
Saks has 41 full-line stores. Saks spun off its e-commerce business as a standalone company. Saks Off 5th is also a standalone business with more than 100 stores in the U.S. and Canada and online.
Neiman Marcus operates five Last Call clearance centers after deciding in 2020 to shut down its Last Call chain, which had grown to more than 20 stores.