Photo: Wikipedia
Who will buy Neiman Marcus?
Neiman Marcus needs money. The chain, according to a New York Post report, is looking around for an investor or a buyer as soft sales have made it more difficult for the luxury department store operator to pay down debt totaling $5 billion.
The chain, which was acquired in a leveraged buyout by Ares Management LP and Canada Pension Plan Investment Board in 2013, has been hit hard as a result of the energy industry’s woes. Two of Neiman Marcus’ busiest stores are in Dallas and Houston, markets where the energy sector is particularly important to the local economies.
According to the Post article, Neiman Marcus’ CEO, Karen Katz, recently traveled to China to meet with potential buyers, but came home without a deal.
Neiman Marcus posted a five percent decline in same-store sales in its fiscal third quarter, which followed a 2.4 percent decline in comps for the previous quarter.
It doesn’t appear that the chain’s faltering performance can be blamed on lack of trying. This past Christmas selling season, the Neiman displayed items from its famed annual Christmas Book at a mall on Long island where it planned to open a store. Last year, it teamed up with The RealReal to offer Neiman Marcus gift cards to customers who consigned their gently used luxury fashions to the site after a referral from a store associate. The chain has also made strides in the use of technology to drive sales in stores and on NeimanMarcus.com.
- Neiman Marcus is looking for a buyer – New York Post
- Neiman Marcus Group LTD LLC Reports Third Quarter Results – Neiman Marcus Group
- Neiman Marcus Group LTD LLC Reports Second Quarter Results – Neiman Marcus Group
- Will displaying fantasy gifts lift Neiman Marcus’ Christmas sales? – RetailWire
- EBay and Neiman Marcus find gold in secondhand clothes – RetailWire
- Will Neiman Marcus’ customers snap, find and shop? – RetailWire
Discussion Questions
DISCUSSION QUESTIONS: How relevant is Neiman Marcus to luxury consumers in the current market? Are its debt issues too much to overcome or are there ways out for the retailer?
Poll
BrainTrust
Dick Seesel
Principal, Retailing In Focus LLC
Adrian Weidmann
Managing Director, StoreStream Metrics, LLC
The intention of the LBO might have been to go public (eventually) or to flip Neiman Marcus to another private investor. But the company isn’t in a position to do either of these things right now, unless somebody covets the Neiman brand badly enough to make a vanity purchase.
Otherwise it’s not inconceivable that the luxury segment is due for the same consolidation that swept the upper-moderate department store segment years ago, especially when Macy’s bought May Company. Maybe there is strength in numbers if Hudson’s Bay decides to add Neiman to its portfolio of brands including Saks and Lord & Taylor … that is, if its own private-equity owners want to assume more debt.
Sorry, they have not “tried everything.” Their customer service level on the floor is as disaffected, disinterested and average as a Kohl’s in many locations when I visited them. The stores are cold and antiseptic.
One could say that’s what made them a “luxury” brand. Maybe, in the ’50s, when women wore white gloves to go shopping. In 2016 a retailer must have a compelling, exceptional customer experience that is not only trained but hardwired into their DNA. Unless Neiman can change that, I see no one willing to buy yet another retailer trying to “go digital” and save their butt.
Neiman Marcus has hit the “wall” on sales, and they could sell if and only if they are willing to accept much less than the asking price. Online, along with a bad economy, is making them less relevant today. More and more of this stuff will continue to happen, as investors want to clean out their slow-moving portfolios and department stores are all struggling to grow. Good luck to them as, in my opinion, it will get worse before it gets better.
A chain that has been referred to as Needless Markups needs to have great merchandise and provide exceptional customer service. As Bob indicated, the service is not there. My impression has been, and remains, that the staff feel they are doing you a favor.
The department store, and Neiman Marcus along with it, are a doomed model. Like gigantic, over priced sloths, it is time for a diet and better retail positioning. Neiman Marcus needs to adapt or perish, and the Internet is dynamically demanding a slimmer, price centric, ease of access, retailer. This is neither a department store, nor Neiman Marcus, in its current model.
“Faltering performance”? It sounds like the comps are pretty typical for a retailer these days. The real problem is the inability to pay down debt from — wait for it — a leveraged buyout … the last thing they need is another one.
Nieman Marcus has failed to keep pace digitally — delivering a bargain basement website and mobile offering to a luxury market that’s used to the latest iDevices and conveniences. It’s going to take a total digital overhaul to restore their brand, and buyers capable of such an overhaul will be hard to get.
Years ago, when I worked in the fashion biz, my co-workers and I scoured NM for great suits on sale. Even then, I felt that the sales associates were looking down their noses at us. It’s been years since the store has had any relevance to me other than to wander in and look for interesting merchandising and display innovation. I have to agree with my peers here; I think the luxury department store business is in trouble. It’s Nordstrom for me, based on service with a smile, even during busy sales events.
They aren’t salable. The company is poorly run under CEO Karen Katz. Class action lawsuits, criminal activity, perjury at Congress. The company is in court smearing its customers who lost their identities. “They invented injury….” Not a wise move. As for customer service, Nordstrom is much more welcoming to everyone. The sales staff looks down and judges customers, rather than trying to sell to them.
Unacceptable. They’re making it uncomfortable to visit their mostly low traffic stores. They are outflanked by larger competitors as well. It’s likely the company will not make it long term. At present they are on life support.