In an industry filled with speculation, the Neiman Marcus Group has had a fair share.
It’s been anything from a spinoff of Bergdorf Goodman to selling the entire company to merging with Saks Fifth Avenue.
“Any chatter contemplating spinning Bergdorf Goodman off is just not true,” Pauline Brown, who sits on the board of the Neiman Marcus Group, told WWD. “Bergdorf Goodman is clearly the jewel in this crown. To even contemplate that would be a bad investor move.”
A statement from Jamie Weinstein, managing director and head of corporate special situations for Pimco — which led the group that bought NMG out of bankruptcy — hints that a sale of the company isn’t imminent, though sources close to the retailer also suggested it would be hard to overlook a generous offer. Talks between Saks and NMG have been on and off for years, but a deal or sale of some sort isn’t likely, at least until NMG shows several more consecutive quarters of gains and continues on firm footing, post-COVID-19. The recent trajectory has been positive. (Saks, meanwhile, is in the midst of proving its strategy of separating its e-commerce and brick-and-mortar operations is a valid one.)
“Pimco is taking a long-term view on Neiman Marcus Group as we believe its growth and transformation strategy will create significant opportunities to differentiate its two leading luxury retail brands, Neiman Marcus and Bergdorf Goodman,” Weinstein said.
Pimco, along with Davidson Kempner Capital Management and Sixth Street Partners LLC, became the owners of NMG in a debt for equity swap that lifted the retailer out of bankruptcy in September 2020.
“For the first time in 15 years, this group is not burdened by debt,” said Brown, who formerly held management positions at The Estée Lauder Cos., Bain & Co, The Carlyle Group and LVMH Moët Hennessy Louis Vuitton, and has a lifestyle radio show, “Tastemakers,” that airs weekly on Sirius XM.
“We as a nation are overstored, selling too much stuff, but Neiman Marcus doesn’t have too many points of distribution. It’s selling things that people genuinely want and enjoy, and editing very thoughtfully. It’s the only multichannel luxury retailer at scale that is committed to its core customer as it has been since 100 years ago,” she said.
While some claim Neiman’s is playing catch up to a more aggressive Saks Fifth Avenue, particularly with e-commerce, Brown said, “We are doing more than just catching up. Neiman’s is now in a position to attract first-rate talent.”
She also said there’s money to impact the consumer “touch points,” meaning investing in the stores and dot-com operations.
“If we don’t get the experience in the stores right, we don’t win. It has to be stellar, inspired and, especially, relevant. Quite a few stores are undergoing renovation in partnership with landlords. It’s being phased over two years.”
Brown nixed the possibility that Neiman’s would decide to split up of its dot-com and store businesses into separate companies, à la Saks. Online pure plays, she said, “almost none of them make money. None of them can compete with Neiman’s,” which is considered the largest online luxury player. “To bifurcate our business is antithetical to where we are going. Time will tell if we are right or they are right.”
Unlike Nordstrom, Saks and Bloomingdale’s, which have off-price divisions and broader assortments and price ranges, “We are singularly focused on the luxury shopper,” Brown said.
She also said, “Multibrand luxury is outpacing monobrands in the U.S. That is just a testament to the fact that customers are looking for great style, great quality and breadth. Any monobrand won’t hit customers on all those levels. They don’t mirror the way customers are living or dressing or shopping.”
On brands expanding with their own stores, Brown said, “There are very few monobrands that have resources to run a high-performing retail network. It takes a lot of money, a lot of competency to run a store. It’s a different challenge from creating a great collection and marketing a brand.”
In addition, “there isn’t a lot of untapped real estate” left that’s suitable for high-end brands to plant their own stores. Growth is going to come from what’s been an historic under-investment in wholesale,” Brown said.
Regarding the new owners, “They are being very long-term minded as to what directions we take. It isn’t about exit value,” she said. If the company implements the right strategies and tactics and grows in value, said Brown, “they will get out at the right time. They don’t have an artificial timeline for this.”