The Dallas-based luxury stalwart filed its long-awaited registration statement for an initial public offering Monday. Details are still vague, with no read on how many shares would be sold or at what price.
The filing with the Securities and Exchange Commission said up to $100 million would be raised in the offering, but that figure is surely a placeholder. The timing suggests an IPO could come as soon as September or October, assuming a bidder with very deep pockets doesn’t take a sudden interest.
There were recent rumors that private equity giant KKR wanted to buy Saks Inc. and then merge it with Neiman’s. That overture appears to have been shot down by Neiman’s owners, but anything could still happen and the filing for an IPO could bring a new sense of urgency. RELATED STORY: Neiman Marcus Profits Rise 13% >>
“It sends a signal that they’re serious about making some move with it,” said Bob Haas, head of the private equity practice at A.T. Kearney, of the filing. “They’re probably eager to do something and the IPO is just one option available to them. A merger with Saks is probably still a possibility. If [the stock market] continues to go down and sideways, the IPO will suddenly become less likely.”
Despite a pull back in stocks over the last week — tied to fears of higher interest rates and instability in China — it’s been a good year for both retail and the broader market. According to Renaissance Capital, there have been 82 IPOs priced in the U.S. this year, a 14 percent gain.
Neiman’s, among a handful of the world’s top designer retailers, has gotten its groove back after stumbling during the recession, but it still has to sell itself to the Street.
“They’ve rebuilt the business to essentially peak prerecession health,” said one retail banker. “It’s all dressed up now. The [profit] margins are good, not great, so the challenge is, if you think you’ve already restored the margin to peak margin and there’s very little growth, well what is the investor paying for?”
The answer to that question could make or break the IPO.
The company and luxury department stores in general don’t have the obvious powerhouse growth story that made the Michael Kors Holdings Ltd. IPO so successful and valued the firm at a current $11.5 billion. And some observers have questioned Neiman’s growth trajectory given its current store base and its uncertain prospects overseas.
But Neiman’s said in the filing that its growth would come from the expansion of its omnichannel capabilities, the e-commerce business, comparable-store sales, smaller stores and proprietary merchandise.
Specifically, the company said it could double the retail footprint of the Last Call outlet concept, expanding to 70 stores over the next five years. Neiman’s also said it could “significantly increase the footprint of our Cusp stores.” And the addition of more proprietary goods, which currently represent less than 2 percent of sales, could enhance its image and its gross margin.
“Certainly there is growth,” said Arnold Aronson, managing director of retail strategies at Kurt Salmon, of luxury department stores. “Is the growth a continual double-digit as it was…probably not. But there are other ways to attain greater profitability. Certainly there’s the e-commerce business, which can be a significant growth vehicle. There are certain selected brick-and-mortar opportunities that will come up.”
Mortimer Singer, chief executive officer of Marvin Traub Associates, said Neiman’s had to do a lot of blocking and tackling through the recession, but can now focus on the future. “They can become more aggressive,” he said. “They are really just starting to capitalize on omni opportunities and there are other opportunities with outlets and private label.”
David Kuntz, debt analyst at Standard & Poor’s, said Neiman’s performance has been “relatively good for the past few years” but profit margins would be restrained as the company invests in omnichannel initiatives to knit together its online and retail operations.
“The upside is probably a little bit more limited going forward than it has been, but we think that the company, the merchandising, the operational execution continues to be good,” Kuntz said.
The luxury consumer, in the meantime, is becoming less predictable.
Retail analyst Walter Loeb said, “Neiman’s is still a major factor in retailing, but what concerns me is that the consumer is feeling conservative.”
Loeb is also concerned about the slowing European tourism to the U.S. but suggested Neiman’s could come up with a new growth vehicle. “Probably there will be something in the making that could be expanded, or an acquisition,” he said.
Taking the final spot on the mens’ portion of New York Fashion Week calendar next month will be none other than @tomford. Though he’s shown his men’s wear in New York in the past, this will mark the first time the designer has shown his men’s collection alone during New York Fashion Week: Men’s. His runway show will debut on February 6 at the Park Avenue Armory. #wwdfashion
London-based couture house @ralphandrusso has certainly been in the spotlight, having its dresses worn by @beyonce, Angelina Jolie, Meghan Markle in her engagement photos and more. For couture, Tamara Ralph focused on ornamentation — think: feathers with chain mail, jet embroidery and clusters of pearls and crystals. See the rest of the collection on WWD.com #wwdfashion #couture (📷: @giovanni_giannoni_photo)
Minnie Mouse celebrated her 90th birthday by getting her own star on the Hollywood Walk of Fame. For her celebratory luncheon, @coach’s creative director @stuartvevers dressed her in a custom made prairie dress, complete with Vever’s take on the polka dot – black sequined versions – under a cropped motorcycle jacket. The designer also put his own mark on Minnie’s classic red shoes, infusing the color with sparkles and adding some Coach crystals. “We chose colors that were very Minnie and also represented quintessential Coach elements,” said Vevers. #wwdfashion #nationalpolkadotday (📷: George Chinsee)
@nickjonas is unveiling his first-ever apparel collection through a partnership with John Varvatos. The limited-edition capsule, which makes its debut in spring, also marks the first time the designer has collaborated with anyone on a line. “The process in working with Nick is amazing. It’s inspiring to be around someone who is not only connected with the trade that they do, but also with what’s happening in the environment around him, and how that connects to what we do with style,” said Varvatos. (RG: @johnvarvatos) #wwdfashion
@margotrobbie steps out onto the red carpet wearing @miumiu. The actress is nominated for “Outstanding Performance by a Female Actor in a Leading Role” in “I, Tonya” at the #SagAwards. (📷: Stewart Cook) #wwdfashion
For @massimogiorgetti of @msgm, the Nineties are his favorite decade. “They had a huge impact on my personal growth. What I like of the Nineties is that they are not so precise in terms of style as other decades…there was actually a bit of everything,” he said. As seen on MSGM’s Spring 2018 show: tie-dye and a bit of grunge, two styles that are synonymous with the decade #wwdfashion #wwddecades (📷: @kukukuba)