General Cinema, the Chestnut Hill, Mass.-based movie theater operator and beverage bottler led by Richard A. Smith and his family, purchased one million shares of a new convertible preferred stock for $300 million in cash in Carter Hawley Hale Stores in 1984, as part of CHH’s effort to resist a hostile takeover bid by the specialty retailer now known as Limited Brands, headed by Leslie Wexner. CHH purchased Neiman Marcus in 1969 and Bergdorf Goodman in 1972.
In 1987, Neiman Marcus Group emerged as part of a restructuring of CHH. CHH’s three specialty store divisions — the Neiman Marcus stores, Bergdorf Goodman and Contempo Casuals — were spun off into a new company to be run by General Cinema. Smith served as chairman and chief executive at both GC and NMG.
GC took the reins of NMG with control of about 61 percent of its stock. Wall Street reacted favorably to the restructuring plan, trading shares of Carter Hawley up $1.125 to $77, a record high for CH, on the New York Stock Exchange.
In 1993 GC was renamed Harcourt General Inc. after its Harcourt Brace publishing unit, which GC acquired in November 1991 for $1.4 billion.
Although the connections between the Smith family, NMG and GC aren’t as close as they had been, the Smith family group still owns 12.7 percent of NMG’s common stock. Individual family members also hold shares, including Richard Smith, 8.1 percent; Nancy Marks, 14.7 percent; Robert Smith, 1.7 percent, and Brian Knez, 1.6 percent. Richard Smith serves as chairman and Robert A. Smith and Brian Knez are the vice chairmen of the NMG. The family still is involved in strategic consultation, but no longer in NMG’s day-to-day management, NMG said. In 1999, HG spun off 54 percent of its NMG stake to GC shareholders.
On April 1, NMG reported that a group including HG had liquidated its entire 14.2 percent stake in NMG for about $128 million. The deal will not affect Neiman’s chairman Richard Smith nor vice chairman Robert Smith, whose shares were not part of Harcourt’s holding.
Harcourt began selling off its Neiman’s stock in May 1999, when it first spun off its controlling interest in the company in a move designed to spur Wall Street interest in both company’s shares. The sell-off gained momentum early this spring when Harcourt made its final moves to divest its Neiman’s position. On March 15, the company reported it had cut its Neiman’s stake to 15.3 percent from 18.1 percent. Then 10 days later, on March 25, Harcourt further reduced its holding to 14.2 percent and sold its remaining shares on April 1 to liquidate an investment it had held for 18 years.
This story first appeared in the October 15, 2002 issue of WWD. Subscribe Today.
The Smith family was unavailable for comment.
James Skinner, NMG’s chief financial officer for over the past year, described the Smiths simply as “patient businessmen.”