The two equity firms that announced the purchase of The Neiman Marcus Group (Dallas) yesterday have said the deal includes the retailer’s credit card business, news that disappointed Neiman Marcus shareholders.
Investors were clearly hoping for a separate, additionally lucrative sale. As a result, Neiman’s class A shares fell on yesterday’s announcement, closing at $92.96, down $5.36. “The shareholders were hoping for another payday,” said one executive involved in the deal.
The two equity firms, Texas Pacific Group (Fort Worth, Texas) and Warburg Pincus LLC (New York), will receive any money gained from a sale of Neiman’s $500 million credit card business, said executives on both sides of the negotiations. Among the frenzied bidders are American Express Co. (New York) and Citigroup Inc. (New York).
One reason the bidding is so high is that the acquisition will include data on an extremely valuable list of many of America’s richest shoppers and what they spend.
For Neiman’s new owners, a credit card sale would give them a quick infusion of cash. “That’ll serve as the down payment,” one executive said.
Neiman’s ceo Burton Tansky declined to comment on the terms of the deal. But he was anxious to discuss expansion plans under the new owners. “We’re opening seven more stores,” he said, “and we have plans to announce another four to five in the next six months.” Rumors are rife that those expansion plans would include Bergdorf Goodman, the high-priced New York fashion retailer on both sides of Fifth Avenue at 58th Street. Tansky denied any expansion plans for Bergdorf.
“We have no plans to expand Bergdorf Goodman at the moment,” he said. “The store is kind of an icon in New York, and for us to expand them, we’d have to go to the same locations that Neiman’s has, and to compete with Neiman’s.” Neiman, he added, had already snapped up, or was about to snap up, most of the country’s “premier” locations.
Bergdorf tried to expand once, to White Plains, N.Y., in affluent Westchester County, where Neiman Marcus has a successful store. The Bergdorf experiment failed. In 1980, after less than six years, the White Plains Bergdorf was replaced by the Neiman store.