Neiman Marcus up for sale, Saks Fifth Avenue owner expresses potential buy out
By April Kirstin Chua
Luxury retailer Neiman Marcus looks on selling itself as it calls off plans for an initial public offering in January. The report comes as another blow to traditional brick-and-mortar retailers who have announced to close several of its stores, recently.
Neiman Marcus has 42 store locations and two stores under the Bergdorf Goodman brand but unlike traditional retailers such as Macy's, JCPenney and Sears, it hasn't announced plans to close its stores. But the Texas-based retailer has struggled. It announced the potential sale on Tuesday following the report of its poor financial results.
The company disclosed a $120 million operating loss in the three months ending in January and the sixth straight quarter of declining sales, according to CNNMoney. Neiman Marcus also reported $6.4 billion in long-term debt and other cash liabilities. Its debt had been trading at about 50 cents on the dollar prior to the potential sale announcement. "The debt market is clearly not too bullish about its chances," said Anthony Canale, head of high yield research at Covenant Review.
Meanwhile, Hudson's Bay Co., owner of Saks Fifth Avenue, has expressed its interest in buying Neiman Marcus as per a Wall Street Journal report. The deal would exclude Neiman Marcus' debt as it has been a long-held dream by Hudson's to buy out the retailer. Although nothing has been finalized, the decline in shares of Hudson's Bay, approximately 2.4 percent, after news of Neiman Marcus buyout signals that investors aren't excited at the prospect.
"Generally speaking," spokeswoman Jen Vargas said in an email, "we selectively evaluate opportunities to accelerate the company's strategic growth while maintaining or enhancing its credit profile." One analyst notes that Neiman Marcus wouldn't bring as much revenue as Macy's but its high-end reputation could fit well with Saks. The buyout would have different strategic reasons - although there is a less real estate in Neiman Marcus, noteworthy is its actual retail portfolio.