Neiman Marcus is heading for IPO
Neiman Marcus, the American luxury retailer headquartered in Dallas, Texas, seems to prepare for an IPO, a public offering of its shares since the private-equity owners Warburg Pincus LLC and TPC are looking for an exit of their unusual long of seven years
The private equity owners bought the century-old department store chain in 2005, putting I USD 1.4 billion in cash and covering the rest of the price of USD 5.1 billion with debt. They planned to hold the shares for five years but the financial crisis and the recession delayed such plans. For the fiscal year (ending in July) Neiman reported higher sales of USD 4.4 (USD 4.0) billion and debt was pared at USD 2.8 billion at the end of April from 3.2 billion in July 2006. For the first time since the buyout Warburg and TPC receive a USD 443 million dividend.
The Neiman Marcus holding company entails 42 Neiman stores, a Bergdorf Goodman store, 31 Neiman Marcus outlets and a luxury home furnishing catalogue as well as an e-commerce site. In March the company bought a stake in the Chinese fashion website Glamour Sales Holding LTD, the first international foray and paid USD 28 million for it.
It is clear that the actual owners wish to escape to sell at a bargain price. The Neiman e-commerce was lagging behind of competition and that was the reason to replace last year the President of Neiman Marcus Direct with John Koryl, an experienced executive from Williams-Sonoma Inc’s online business. Before he worked at eBay Inc. and this hiring seems to have already paid off since the online business increased 18 % during the fiscal year.
Another change was the dropping of accepting only cash, American Express or Neiman-branded credit card, now also Visa and MasterCard customers are welcome. And this July Neiman announced a very unusual partnership with cheap-chic retailer Target Corp. to jointly create and sell a holiday collection with price tags as low as USD 7.99!
Analysts think that the time is ripe for an IPO of Neiman Marcus because the demand for luxury goods is still there and has outperformed the rest of the retail business in the U.S.A. Company’s executives held recently meetings with analysts to discuss the future strategy of the company and to underline the great potential of the online business, also internationally.