Women’s Wear Daily reports that Neiman Marcus Group (Dallas) is getting closer to going public as its other options vanish.
An uninvolved investment banker told WWD, “There aren’t many corporate buyers for an asset such as Neiman Marcus. The other option is to trade to bigger financial sponsors, but there’s not many at the next-higher level after TPG and Warburg Pincus. That leaves really the IPO as the exit strategy that’s left.”
In recent weeks, notes WWD, merger talks with Saks Inc. (New York) and discussions with possible buyers, such as the sovereign wealth fund of Qatar, were held. But Saks went to Hudson’s Bay Co. (Toronto), and TPG Capital (Fort Worth, Texas) and Warburg Pincus (New York) – the two private equity owners who bought Neiman Marcus in 2005 for $5.1 billion – now reportedly view an IPO as the best exit strategy.
Investors are impressed with the facts that Neiman Marcus stores are productive, its customers loyal, its management stable and its brand carefully managed. Also, it’s widely believed that there’s room to grow its Last Call outlet business, which right now has only 35 units, and its Cusp chain of freestanding stores, which has been on hold.
On the other hand, reports WWD, investors might be concerned about Neiman Marcus’s limited potential for expanding in the U.S. and, at the same time, its untested potential overseas. Also, the rise of leased vendor shops in retail spaces like Saks and Bloomingdale’s might hinder Neiman Marcus, which has long had a policy against leasing space to brands.