On Friday, Ares Management LLC and Canada Pension Plan Investment Board said they completed the acquisition of Neiman Marcus Group Ltd. Inc. for $6 billion from TPG and Warburg Pincus, confirming a WWD report the night before that the closing was imminent.
Now the industry awaits the closing of Hudson’s Bay Co.’s $2.9 billion deal to buy Saks Fifth Avenue from the shareholders. That could happen in a matter of days or a few weeks, following shareholder approval. The shareholders are expected to approve the deal on Wednesday at a special meeting in New York.
“We are very pleased with the successful outcome of this transaction,” commented Karen Katz, the president and chief executive officer of Neiman Marcus Group. “We look forward to partnering with Ares Management and CPPIB. We believe the future for Neiman Marcus Group is bright.”
Neiman’s comes out of the deal highly leveraged, boosting its debt to a projected $4.6 billion from $2.7 billion. That will pressure the team to generate increased revenues to support the increased debt and force Neiman’s to sharpen its already strong luxury game and develop new growth strategies. Under the buyout plan, Ares and the pension fund planned to cover a quarter of the purchase price themselves, selling roughly $1.56 billion in bonds, and take out a term loan of just under $3 billion. The retailer is also taking on an $800 million senior secured asset-based revolving credit facility to maintain liquidity. Ares is a global alternative asset manager and an investment adviser based in Los Angeles.
The owners have already said that priorities involve investing in the stores as well as technology, and Katz, Neiman’s ceo since October 2009, backed that up by saying they were keen on investing in long-term growth strategies. Since taking the reins, Katz has demonstrated a willingness to test new waters in technology, service and on other fronts and has cited the possibility of opening more Last Call outlets. Neiman’s has 35 outlets, though its most direct competitors, Saks Inc. and Nordstrom, both operate many more outlets. Neiman’s previously set $135 million in capital expenditures for 2013, largely for renovating the Michigan Avenue store in Chicago, as well as renovations at Bergdorf Goodman and a few other Neiman’s locations.
International expansion needs to be explored since, with 41 full-line Neiman’s stores across the country as well as two Bergdorf Goodman stores in Manhattan, virtually all domestic store-growth opportunities have been tapped. However, a store in the Roosevelt Field mall in Garden City, N.Y., is planned. Most Neiman’s stores are highly productive and deliver strong service but not all. The Orlando, Fla., and Natick, Mass., units are said to be among the weaker locations.
While no overseas stores are in the works, Neiman’s does conduct business online in China, and has a 44 percent stake in Glamour Sales Holdings, an Asian-based e-commerce site specializing in flash sales. Glamour helped Neiman’s launch neimanmarcus.com.cn and is helping migrate shoppers to the Neiman’s site. Neiman’s also ships products to other countries, though the retailer hit some road bumps in China and decided to downsize the team there and ship from its U.S. inventories rather than holding inventory in Chinese warehouses.
Another possibility is to roll out Cusp specialty stores for contemporary sportswear and accessories. There are only six operating, though Neiman’s planted a bigger stake in the contemporary market by recently rolling out Cusp contemporary departments inside its stores.
Neiman’s had a good year, reporting net earnings of $163.7 million, versus $140.1 million in fiscal 2012. Comparable revenues increased 4.9 percent. Tightened expenses and good inventory management fueled the results.
@tradesy is turning the concept of a showroom upside down with its new space in Santa Monica. Here, the company plans to hold events, art exhibits and a showcase rare fashion pieces like this Louis Vuitton boxing set. Get all the details on Tradesy’s first showroom on WWD.com. #wwdnews
Spotted last night at the @erdem x @hm launch event: Kate Bosworth, Rashida Jones, Kirsten Dunst and Selma Blair. The party, which took place in LA, also marked the opening of their pop-up shop. “I was interested in creating a collection that wasn’t in any way disposable. It was about pieces you’d create and keep forever, things that have a permanence to it,” designer Erdem Moralioglu said. #wwdeye (📷: Katie Jones)
Renee Zellweger in yellow in 2001 and again in 2017. Chosen as one of the 12 @pantone Leading Spring Colors (and dubbed “Meadowlark”), it only makes sense that the bright hue stands the test of time and is making a resurgence this season, seen already on stars like @blakelively and @gigihadid. (📷: Donato Sardello & @rexfeatures) #wwdfashion #tbt
Dior’s 70th anniversary celebration continues with a new exhibition at the Royal Ontario Museum in Toronto. “Christian Dior,” which is scheduled to run through March 18, takes a look at the founders tenure from 1947 to 1057 and feature 40 designs. Pictured here is an evening gown from the Ailée, fall 1948-49 haute couture collection. #wwdfashion (📷: Brian Boyle)
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews