Those in the market for a luxury retail brand may want to get their checkbooks ready. As Bloomberg shares, Neiman Marcus may be putting itself on the block, and the speculation is mounting that another upscale retailer has its sights set on acquiring the brand.
Back in January, the iconic retailer was considering an initial public offering to help boost its coffers, but those plans have gone by the wayside. Disappointing quarterly results revealed that same-store sales fell by 6.8 percent at stores open at least a year. Combine that with a net loss of $117.1 million for the period, and it’s quite clear that Neiman has joined the ranks of retailers affected by the evolving retail environment.
Reports indicate that Hudson’s Bay Co., the parent company of Saks Fifth Avenue, has its eyes on a buyout, and the rivals are currently engaged in talks. Hudson’s Bay has long been rumored as a suitor of Neiman, and that fact was confirmed by M Capital Partners Inc. analyst Steven Salz. He indicates that company chairman Richard Baker has eyes for Neiman, and Baker may be close to pulling the trigger. “He’s talked about buying Neiman on and off every couple of months,” Salz says.
Hudson’s Bay has declined to comment directly on the speculation, but spokeswoman Jen Vargas offered up some thoughts on the company’s general line of thinking on mergers and acquisitions. “Generally speaking, we selectively evaluate opportunities to accelerate the company’s strategic growth while maintaining or enhancing its credit profile,” she said.
Neiman’s quarterly results were somewhat impacted by the firm’s decision to write down its brand and other assets by $153.8 million. Any deals in the works would reportedly not include the company’s substantial debt, which checks in at a staggering $5 billion.
As many retailers are beginning to realize, merely being an iconic brand of yesteryear is not enough to resonate with today’s consumers. The reported mix of Neiman shoppers breaks down as 36 percent Generation Xers, 15 percent Millennials, with the remainder falling into the baby boomer and older crowd.
Also under the Nieman umbrella are the off-price Last Call clearance centers and the Bergdorf Goodman luxury stores. Hudson’s Bay has also been a rumored suitor for Macy’s, but Salz indicates that Neiman may be a better fit for its portfolio.
“Neiman is a different brand from Macy’s. It’s luxury versus kind of midmarket. It would have different strategic reasons. There’s less real estate at Neiman, but it’s more for the actual retail portfolio – the real brand,” he said.
