NEW YORK — The Neiman Marcus Group Inc. is selling its private label credit card accounts and related assets to HSBC-North America's Retail Services for about $640 million in what the companies said was "a strategic alliance to support and enhance the credit operations of Neiman's and its subsidiaries."
The purchase price for the credit card operation includes about $527 million in net cash proceeds and the assumption or repayment of an estimated $113 million of securitization liabilities. In addition, Neiman's said it would receive unspecified payments from HSBC based on credit sales.
The transaction could help finance the $5.1 billion acquisition of NMG by Texas Pacific Group and Warburg Pincus LLC, two private equity firms, and possibly provide capital for store openings and remodeling. The TPG acquisition has caused speculation about Neiman's future, and how the owners will shape the business and cover the debt load.
There is a growing trend among retailers to sell credit operations to propel growth and create healthier, less leveraged balance sheets. Federated Department Stores Inc., which is acquiring May Department Stores Co., said last week it would sell its credit portfolio and the May portfolio to Citigroup for $4.5 billion. Kohl's Corp. and Sears, Roebuck & Co. already have sold their credit operations, as well, among other chains.
Neiman's, which is known for its attention to customers and details, said it would continue to handle key customer service functions, including new account processing, transaction authorization, billing adjustments, collection services and customer inquiries. The retailer and HSBC also will enter into a long-term relationship, whereby Neiman's receives compensation for certain marketing and servicing activities.
Neiman Marcus and its Bergdorf Goodman division have a total of about three million accounts.
Selling off the credit portfolio, according to Arnold Aronson, managing director of retail strategies at Kurt Salmon Associates, "is a perfectly logical financial device to fund new investment and reduce debt." The credit card portfolio is "a big asset, and selling it does not decrease the value of the operating business. It's transparent to customers, and the sale has no negative effect to the business operations."
In a statement, Burt Tansky, president and chief executive officer of NMG, said, "Our customers can expect the same outstanding customer service they have always received from Neiman Marcus and Bergdorf Goodman, while HSBC will provide us with additional operational and marketing capabilities to support our continued growth."Joseph Hoff, ceo of HSBC Retail Services, added, "Helping our partners grow through enhanced customer relationships is what drives us at HSBC, and we are looking forward to reinforcing and extending the Neiman Marcus and Bergdorf Goodman brands through every aspect of the private label card programs. Our marketing, database analytics and CRM expertise, combined with our investments in technology, allow us to support a positive customer experience across all the critical interactions that the Neiman Marcus Group has with its customers."
The deal is expected to close by July 31, pending regulatory reviews and closing conditions.
In addition to the Neiman Marcus and Bergdorf Goodman stores, NMG operates a print catalogue and online division. The catalogue and online businesses are said to be the fastest-growing units in the company, but there are opportunities to open stores in the U.S. in key affluent metro areas where Neiman's may have just one site, or none. Smaller boxes also might be considered, a change from the current model of operating large stores with major designer presentations.
HSBC Retail Services is a major issuer of private label credit cards for stores. Other major operators of retail credit card businesses are General Electric Credit Corp. and Citigroup.
“What he has done at Vuitton is really exceptional,” said @gameofthrones’ actress Gwendoline Christie on @mrkimjones’ final show for @louisvuitton. “He has rebooted luxury in terms of making it commercial, viable and contemporary. And most importantly artistic. He has never compromised his artistic vision for the sake of commodity.” (📷: @zefashioninsider)
After seeing a demand for men’s wear from its customers, British contemporary women’s wear label @ariesarise has added a men’s wear component and will launch a unisex collection with @mrporterlive. The 20-piece collection includes jackets, denim, logo T-shirts and more with deconstructed ‘90s vibes. Set to launch on January 18, you can shop the pieces on Aries’ website and on mrporter.com. #wwdfashion
“And so spending so much time with a character who thinks like that, inevitability you try and analyze yourself and go back and think about your own demons and dark chapters that you had in your life,” says @thedanielbruhl of his role in TNT’s “The Alienist.” The show, set in the Gilded Age of New York, also stars Dakota Fanning and Luke Evans. Head to WWD.com to read about how 39-year-old Brühl prepared for the role and why he thinks the show is so relevant to today #wwdeye ( 📷: @Eriktanner)
Now that Celine Dion’s collection has topped $10 million in sales, the pop superstar, fashion icon and newly-minted industry player is eyeing growth in Asia. Read the full report by @tiffanyap, link in bio. #wwdnews #celinedion
“My personal philosophy to beauty is paying attention to oneself. I love to be outdoors, lots of fresh air, trying to take care of yourself as best you can. I always notice that comes through,” says Felicity Jones, the global face of @shiseido-owned @cledepeaubeauteus, which launches today. Head to WWD.com to read more about the actress’ love for beauty and how she prepared for her new role in “The Basis of Sex,” playing the young Ruth Bader Ginsburg. #wwdbeauty (📷: @dandoperalski)
Among the familiar faces at @off____white’s show was a surprise figure: Japanese artist @takashipom, pictured here on Wednesday morning. Other show-goers included @jerrylorenzo, who spoke about his upcoming project: a @nike collaboration for back to school, with designs inspired by his childhood on the West Coast. Sitting in the front row were Future, Don Crawley, @miguel and more. See the rest of the photos on WWD.com #wwdeye (📷: Stephane Feugere)
According to @laurentsai, former “Terrace House: Aloha State” cast member, she didn’t know she was auditioning for the Japanese version of “Real World.” “I was telling a couple of my friends and someone’s like, ‘That sounds a lot like Terrace House.’ I was like, ’No it can’t be.’” Turns out, it was. But Tsai isn’t just a reality star — she’s an illustrator who has worked with Starbucks Japan and most recently, she’s dipping her toes into the fashion world. Head to WWD.com to read about her time on the show, modeling and her art. #wwdeye (📷: @danieldorsa)
More changes are coming to New York Fashion Week: Beginning with the spring 2019 collection, @alexanderwangny will move his New York show to June from September, adopting a biannual schedule with collections shown in June and December. Additionally, the @cfda is planning for an official summer/winter fashion season taking place as soon as June and December 2018. Read more about the upcoming changes on WWD.com. #wwdnews #wwdfashion (📷: @slovekinpics)