The luxury retailer on Tuesday filed a registration statement with the Securities and Exchange Commission. The filing is essentially a placeholder since there has not yet been any determination regarding the timing, the number of shares that will be offered, or the price range for the proposed offering. The filing said the company’s common stock would trade under the symbol “NMG.”
The last time Neiman Marcus filed for an IPO was in June 2013. At that time, its owners — private equity firms Warburg Pincus and TPG, which acquired the company for $5.1 billion in 2005 — were pursuing a dual track in which they were debating whether to proceed with the IPO or sell the company. The two firms subsequently sold Neiman’s in October 2013 to two other financial sponsors, Ares Management and Canada Pension Plan Investment Board for $6 billion. But that raised the company’s long-term debt to $4.5 billion from $2.7 billion.
“The word from bankers is that Neiman’s is overburdened by debt and feels now may be the time to extinguish some of it,” said one source, who requested anonymity. “They’ve been socked by tourists not spending as much in their key stores,” like Beverly Hills and Bergdorf Goodman in New York. International tourism to the states from most countries is up but the level of spending on fashion is down because of the strength of the dollar making it more expensive for foreigners to buy in the U.S.
“This is very speculative, but it’s a smart move on their part,” added the source.
“It seems to me this is a good time for Neiman Marcus to go public,” observed Craig Johnson, president of Customer Growth Partners. “Their most recent financials showed a slow down from earlier in the year. The tourist trade, whether Chinese, Brazil, Russia or Europe, all of that has been weak, and it’s going to worse before it gets better, particularly from China. With a public offering, the owners want to monetize their investment. This may represent the best opportunity to monetize. The environment may well get worse in the next year or two. Obviously, if things tank too badly, just before you file a registration doesn’t necessarily mean you go public. They want to preserve some flexibility. Basically, it’s a liquidity event. Right now, Neiman’s is overburdened with debt, its fairly low cost debt but interest rates could be going up so if you are going to retire some debt they could be thinking let’s get that done now.”
Aside from the debt situation, “Neiman’s is a very well run store with a very good management team,” Johnson added.
Neiman’s said that due to regulatory restrictions, it would not comment further beyond its disclosure of the registration statement on Tuesday.
But last year, Karen Katz, chief executive officer of NMG, said at the WWD CEO Summit, “We know how to run a company with a lot of debt on the balance sheet. Not everybody is up for this challenge but our team understands what it takes to have to make $260 million in interest payments every year because of the $4.5 billion in debt.”
In Tuesday’s filing, the high-end retailer said it operates 41 full-time stores, as well as two Bergdorf Goodman stores on Fifth Avenue and the MyTheresa e-tail business. The store nameplates also operate their own Web sites.
“Based only on sales transacted in store, the combined productivity of our 43 full-line stores was $589 per square foot” for the 12 months ended May 2, the filing said. The filing also noted that the average age of its customers is 51, and about 48 percent of customers are 50 or younger. Other demographic information includes that 79 percent of customers are female, and 38 percent have a median household income of more than $200,000.
For 2014, the company said it had about $4.8 billion in revenues, and through the end of the third quarter of fiscal year 2015, Neiman’s has posted “22 consecutive quarters of positive quarterly comparable revenue growth, with an average quarterly increase of over 6 percent.”