By Matthew Monks, Erik Schatzker & Cotten Timberlake - Sep 9, 2013 8:01 AM GMT+0400
Neiman Marcus Inc. runs 41 stores under the same name across the U.S. and two Bergdorf Goodman department stores on New York City’s Fifth Avenue, according to its initial public offering filing. Photographer: David Paul Morris/Bloomberg
Neiman Marcus Inc., the luxury retailer that filed for an initial public offering in June, is close to an agreement to sell itself to Ares Management LLC and the Canada Pension Plan Investment Board for $6 billion, two people with knowledge of the matter said.
A deal with Neiman’s private-equity owners, TPG Capital, Warburg Pincus LLC and Leonard Green & Partners LP, could be announced as soon as today, said one of the people. An agreement hasn’t been reached yet and the talks could still fail, said the people, who asked for anonymity because the negotiations are private.
Neiman Marcus Inc. runs 41 stores under the same name across the U.S. and two Bergdorf Goodman department stores on New York City’s Fifth Avenue, according to its initial public offering filing. Photographer: David Paul Morris/Bloomberg
Sept. 9 (Bloomberg) -- Neiman Marcus, the luxury retailer that filed for an initial public offering in June, is close to an agreement to sell itself to Ares Management LLC and the Canada Pension Plan Investment Board for $6 billion, two people with knowledge of the matter said. Erik Schatzker reports on Bloomberg Television's "In The Loop." (Source: Bloomberg)
Neiman’s owners, who paid about $5.1 billion for the Dallas-based retailer in 2005, have been considering an IPO if they don’t draw a bid that meets their expectations, people familiar with the plan said last month. Revenue at Neiman hasn’t returned to the level seen before the 2008 financial crisis at Neiman as luxury shoppers have been slow to return to stores.
“Neiman is an excellent brand and an excellent company,” Michael Appel, founder of Appel Associates LLC, a retail consultancy, said in a phone interview yesterday. “The question is what can the buyers do with it? Hope springs eternal. Perhaps they feel that their management and their ability to work with companies will get them the return they are looking for.”
Ginger Reeder, a spokeswoman for Neiman, declined to comment.
Revenue at Neiman rose 8.6 percent to $4.35 billion in the fiscal year ended July 28 2012. The company runs 41 stores under the same name across the U.S. and two Bergdorf Goodman department stores on New York City’s Fifth Avenue, according to its IPO filing.
Luxury Spending
Luxury spending in the Americas grew 5 percent on a constant-currency basis in 2012, less than half the 13 percent gain of the previous year, according to Bain & Co. estimates.
An acquisition of Neiman would be the second deal in the luxury retail industry in recent months.Hudson’s Bay Co. (HBC) agreed to buy Saks Inc. for $2.4 billion in July, combining Canada’s largest-department store chain with one of the most prestigious U.S. luxury retailers in a deal that may spur the creation of a real estate investment trust. The transaction, which brings together the Lord & Taylor and Saks Fifth Avenue brands, creates a company that will operate 320 stores.
The possible deal comes at time when the U.S. retail sector has cooled as some consumers have switched their spending to bigger items including cars, homes and home furnishings. The chains that sell apparel and other discretionary goods have suffered, including Nordstrom Inc. (JWN) and Macy’s Inc. (M), which reported second-quarter sales that trailed analyst estimates.
E-Commerce
The poor climate may have persuaded Warburg and TPG to go for an outright sale rather than an IPO, Appel said.
Neiman Marcus was founded in Dallas by Herbert Marcus, his sister and her husband A.L. Neiman in 1907. Marcus bought out the Neimans in 1928 and his son Stanley ran the stores from 1952 to 1979. Stanley’s son Richard then became chief executive until 1988, when he resigned, ending 81 years of family management of the chain.
The chain is known for its Christmas catalog, which offers such gifts as limited-edition McLaren cars for $354,000.
Chief Executive Officer Karen Katz has been working to spur sales growth by introducing the chain’s Cusp contemporary fashion concept into its namesake stores to attract younger customers, opening an e-commerce site in China, and rolling out more Last Call outlets.
The Wall Street Journal reported the negotiations earlier.
To contact the reporters on this story: Matthew Monks in New York at mmonks1@bloomberg.net; Erik Schatzker in New York at eschatzker@bloomberg.net; Cotten Timberlake in Washington at ctimberlake@bloomberg.net
To contact the editors responsible for this story: Robin Ajello at rajello@bloomberg.net; Jeffrey McCracken at jmccracken3@bloomberg.net
