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Neiman Marcus confident in exit options

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Oct 26, 2023
A sign hangs outside of a Neiman Marcus store.

Photo: Scott Olson/Getty Images

In the wake of reports that it was for sale, Neiman Marcus saw inbound interest both from the public market and financial buyers, a source close to the situation tells Axios.

Why it matters: The overtures give the Dallas-based luxury retailer confidence that it will have a robust sale process, the source says.

Of note: The retailer includes an IPO as well as a sale among its exit options, and a best-case strategy likely involves a dual-track process, the source says,

Yes, but: Market conditions and valuations aren't ideal — and with $1 billion in liquidity, Neiman Marcus isn't in a rush to exit, the source says.

By the numbers: Revenue overall was flat or down slightly, which in part reflects a decrease in luxury spending broadly, the source says.

  • While Neiman was still profitable in its most recent fiscal year, which ended July 29, the profit margin was in the mid-single digit rather than in the double digits, the source says.
  • A financial source said that EBITDA had declined to $240 million from $400 million.
  • It was previously reported that the retailer had about $5 billion in GMV and $495 million in adjusted EBITDA last year.

Flashback: In the years leading up to the pandemic, the luxury retailer strained under some $4 billion in debt.

  • That prevented it from reinvesting in the business, namely digital and store renovations while trying to fend off increasing competition.

Between the lines: Rumors have swirled for years that Neiman Marcus could merge with or be acquired by Saks and its owner, Hudson's Bay.

  • It's a storyline recently rehashed by the New York Post, which also reported months prior that the company was looking to sell its New York banner, Bergdorf Goodman.
  • A third source familiar with Neiman Marcus' thinking says sale options are discussed at the board level with the retailer's investment banker JPMorgan out of a fiduciary duty, but that's the extent.
  • It's possible one of the minority shareholders — either Sixth Street, Davidson Kempner, or Farfetch — may be agitating for some deal, the source says.
  • There are likely more than one or two potential buyers, including Hudson's Bay, looking to acquire Neiman Marcus at a discount, the source adds.

The big picture: It will be hard to predict how consumers will behave this holiday season, the source says.

Neiman Marcus and Pacific Investment Management Co. declined to comment. Sixth Street and Davidson Kempner did not immediately respond to a request for comment.

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