Neiman Marcus Group Inc. has made it official — it’s not about to go public anytime soon.
In August 2015, the Dallas-based luxury retailer filed a registration statement with the Securities and Exchange Commission indicating that it planned to pursue an initial public offering of its shares. No time frame for an IPO was given, and the retailer’s performance over the last year has made it increasingly unlikely an offering would happen anytime soon.
On Friday, Neiman’s in effect confirmed the reality in another filing with the SEC, saying, “The company has determined that it is not in its best interests to proceed with the IPO contemplated by the registration statement at this time. The registration statement has not been declared effective by the commission, and the company confirms that no securities have been sold in connection with the offering contemplated thereby.”
The filing is believed to be an outcome of a decision made long ago by Neiman’s and its owners. In September 2015, WWD reported that NMG put the IPO on hold, as the stock market was dropping at the time.
The owners of Neiman Marcus Group — Ares Management and the Canada Pension Plan Investment Board — are said to be eager to sell the company, and have been for some time. They spent $6 billion to acquire the retailer in 2013 from Warburg Pincus and TPG Capital.
While abandoning the IPO, at least temporarily, the owners could still seek to sell the company to another retailer or to other private equity investors. Considering recent sales trends, how highly leveraged Neiman’s is with $4.7 billion in long-term debt, the high price paid for the business, and difficulties in the luxury and department store sectors generally, any type of sale of the retailer would be hard to pull off.
The most logical suitor is Hudson’s Bay Co., led by executive chairman Richard Baker, who has long been interested in acquiring Neiman’s. But it is believed no sale is imminent and that the price tag set by the owners is more than HBC or other potential buyers would want to pay.
While the IPO has been abandoned, at least for now, other plans at NMG are proceeding, including the opening of a store in Fort Worth, Tex., next month.
Neiman’s is also planning to open in 2018 its first New York store, in the Hudson Yards mixed-use complex on Manhattan’s West Side. “We’re right on track in terms of our construction,” Karen Katz, NMG’s president and chief executive officer, said in a recent conference call. “We are extremely excited about the look and feel and the vendor lineup. It will truly be the store of the future for Neiman Marcus.”
NMG is continuing to renovate and expand Bergdorf Goodman, and has been renovating other stores. Among the projects: The Beverly Hills flagship was recently overhauled, and select departments inside the Neiman’s store in White Plains, N.Y., were recently remodeled.
In response to the difficult environment, executives are reexamining strategies, seeking fundamental change and striving to develop formats to attract younger demographics, so there’s less dependence on older customers. For example, Neiman’s recently opened a Rent the Runway “Dream Closet” inside its San Francisco store and expects to open more.
The luxury chain is also pressing vendors for more exclusives and to alter the timing of fashion deliveries to better reflect the rising “buy-now-wear-now” preferences of shoppers.
“There is no question that our core customer is visiting us a little less frequently and customers in general are less loyal to any one retailer,” Katz said during the call. “A lot of that is because of the price transparency online. Price transparency on the Internet gives customers greater access to information about price and promotion. I think that is here to stay. There’s less regard for loyalty, channel or brand.”
Last month, the retailer reported a net loss of $23.5 million for the first quarter ended Oct. 29 compared to $10.5 million for the same period a year ago. Adjusted earnings before interest, taxes, depreciation and amortization was $122.9 million compared to adjusted EBITDA of $164.3 million for the year-ago quarter.
Total revenues in the quarter came to $1.08 billion, representing a decrease of 7.4 percent compared to $1.16 billion for the first quarter a year ago.
Neiman’s decision on the IPO also reflects a malaise in the IPO market, which could be attributed at least in part to the Brexit vote and the U.S. presidential election. But according to IPO research and tracking firm Renaissance Capital, 2017 could mark the end to the U.S. IPO recession, which has lasted since August 2015. Tech-related firms including Snap, Uber, Pinterest, Dropbox, Airbnb and Spotify are expected to comprise the mega IPO filings, though there could be others this year, including Canada Goose, Authentic Brands Group and J. Jill.