Jason Voinov

Neiman Marcus is no wallflower, but it still can’t seem to find a willing dance partner.

The tony retailer has been playing the field, actively talking to suitors, hiring advisers and exploring its options since January, when it finally abandoned hopes for an initial public offering.

But so far, and for the immediate future, it appears none of the talks with potential buyers or investors are bearing fruit and it’s status quo for the company.

Neiman Marcus remains hugely influential in fashion with the ability to instantly confer credibility on a young brand. But it finds itself with a lot of baggage — namely $4.7 billion in debt stemming from two successive private equity takeovers and all the woes of retail, from low mall traffic to stiff competition online.

Richard Baker, governor and executive chairman of Hudson’s Bay Co., who folded Saks Fifth Avenue into his Hudson’s Bay Co. in 2013, has long coveted Neiman Marcus and its Bergdorf Goodman unit and has been courting the retailer.

He might be the most motivated buyer since he is one of the great proponents of the department store model — and the real estate valued embedded in the business as well as potential synergies — and has an empire he’s looking to expand.

But between the high price expectations of Ares Management LLC and the Canada Pension Plan Investment Board — which bought the retailer for $6 billion in 2013 — and the current reality of Neiman’s sales and profits, Baker hasn’t been able to make the numbers work.

Sources said the talks between Baker and Neiman Marcus are not dead, but the two sides have not been able to reach an agreement on price and no deal appears to be close.

“There are still conversations” between the two parties, one source said. And Baker is known for playing the long game when it comes to acquisitions, chasing names he wants for years.

Additionally, sources told WWD that Related Cos. met with Neiman’s two weeks ago in New York, but, contrary to press reports it was considering buying the chain, the real estate firm’s intention instead was to get a read on the status of the retailer and some reassurances. Related was also looking to see if there was a way for it to “strategically help” Neiman’s.

Related already provided many inducements for Neiman’s to sign a lease at its key development in Manhattan of Hudson Yards, including large floor plates, windows along 10th Avenue, though Neiman’s will be housed on three upper floors of the Hudson Yards mall under construction, an express elevator to the store and possible breaks on the rent.

“Related did not discuss acquiring Neiman’s,” a source said about the recent meeting.

It’s unclear how Related could further support Neiman’s financially, though there could be amended lease terms or additional assistance in building the store. The three-level Neiman’s is expected to open in the fall 2018.

The Neiman Marcus site under construction.

The Neiman Marcus site under construction at Hudson Yards.  Don Stahl

“Neiman Marcus is committed to delivering a world-class flagship store at Hudson Yards and we are well into the process of building out the space,” said a Neiman’s spokeswoman on Wednesday. “The location and its demographics are compelling and an ideal fit for our customer base. The store at Hudson Yards will represent our store of the future and will introduce elements of technology and service that elevate our legendary service model.”

The spokeswoman said many elements of the recently opened store in Fort Worth, Tex., will be seen at the Hudson Yards store, which is a critical location for a few reasons. It’s the first store for the Neiman Marcus brand in New York and could potentially be a showcase to attract the attention of Wall Street, in the event the company ever gets sold or goes public.

Neiman’s would not comment on the meeting with Related, but all eyes will be on the opening next year.

A Related spokeswoman said the mall is 70 percent leased, the area on Manhattan’s West Side is significantly under-retailed and the mall will serve the more than 125,000 people expected to live, work and visit Hudson Yards each day. Related did not comment on its meeting with Neiman Marcus officials.

So while everyone is eyeing the opening at Hudson Yards, no one is exactly holding their breath for a Neiman’s deal to be done.

Ares and CPPIB are seen as underwater on their investment, but have some time to try to build their equity back up or hope that fashion department retailing in general becomes a less toxic in investment circles.

That leaves Neiman Marcus trying to make things work on its own. Its debt is expensive to maintain — interest expenses for the six months ended Jan. 28 tallied $146 million — but there are no significant maturities until 2021, when $2.9 billion comes due.

Experts stressed that even though that’s years down the line, the clock is ticking loudly and that eventually something will have to give. And the current weakness in retail isn’t helping.

“The department store space right now is in a secular slowdown,” said Mathew Christy, a debt analyst at Standard & Poor’s, pointing to the impact of e-commerce on retail.

“Those aspects are not going away in the near future,” Christy said. “Can they really wait it out? We don’t see that. You still have that secular decline there, mall traffic is declining, there’s increased competition and increased price transparency.”

Christy said Neiman Marcus’ debt to adjusted earnings before interest taxes depreciation and amortization ratio, or leverage, needs to fall from nine-times to closer to seven-times to signal a more sustainable capital structure.

S&P downgraded the company’s debt in February and gave it a “CCC-plus” rating, indicating that the rating agency views the situation as risky, but that some sort of restructuring or other event could be more than a year in the future.

Neiman’s could try to work with its debt holders, trading them something to refinance or cut some other deal.

In March, the company cleaved off the assets of the Mytheresa business and three Neiman’s stores as “unrestricted subsidiaries” for the purposes of the company’s cash pay bonds and PIK toggle debt. The stores have a book value of $98 million and Mytheresa has total assets of $281 million, including $118 million of goodwill.

Those businesses on their own could help the equity owners garner some value from their investment or could conceivably be used to help bolster Neiman Marcus’ case as it negotiates with debt holders. The subsidiary shift was also seen as complicating Baker’s efforts to reel in Neiman Marcus.

And so the dealmaking dance of one of fashion’s key players continues.

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