Neiman Marcus Group, amid declining sales and earnings, is exploring “strategic alternatives” which may include the sale of the company or other assets, as well as other initiatives to improve its capital structure.
The company has been dragged down by its heavy debt load of $4.9 billion, a situation compounded by several seasons of disappointing performance. The debt load stems from the $6 billion acquisition of the company by the Canada Pension Plan Investment Board and Ares Management in 2013.
For its second fiscal quarter ended Jan. 28, Neiman’s, hurt by poor sales and traffic trends and impairment charges, reported a net loss of $117.1 million, compared with net earnings of $7.9 million for the second quarter of fiscal year 2016.
Adjusted earnings before interest, taxes, depreciation and amortization for the second quarter of fiscal year 2017 was $126.8 million compared to $183.0 million in the prior year.
Total revenues came to $1.4 billion, a decrease of 6.1 percent compared to total revenues of $1.49 billion for the second quarter of fiscal year 2016. Comparable sales decreased 6.8 percent.
The company recorded non-cash impairment charges of $153.8 million in the second quarter, primarily related to its Neiman Marcus brand.
In addition, the Dallas-based luxury retailer made changes to its corporate structure to enhance its financial flexibility with respect to some of its assets. The company said certain subsidiaries including Mytheresa.com were designated as “unrestricted subsidiaries” for purposes of cash pay notes and PIK toggle notes.
No timetable for the sale of the company or any of its assets has been set.
Officials of Neiman’s have previously tried to sell the company and there have been on-and-off talks with the Hudson’s Bay Co. Last year, the company nixed plans for an IPO.
Hudson’s Bay Co., responding to reports of its interest in NMG, said, “As a matter of company policy, we do not comment on rumors or market speculation. Generally speaking, as we have previously stated, we selectively evaluate opportunities to accelerate the company’s strategic growth while maintaining or enhancing its credit profile.”
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