Reports: Hudson’s Bay in talks to buy Neiman Marcus

Neiman’s Q2 swings to a loss

Dallas-Hudson’s Bay has reportedly reached out to Neiman Marcus Group for possible talks about acquiring the troubled luxury department store chain.

Stories about these talks have appeared in the Wall Street Journal, Fox Business and the St. Louis Post-Dispatch—all quoting “people familiar with the matter,” as Fox Business expressed it.

Yesterday, as it released its second-quarter results, Neiman Marcus said it has engaged unnamed financial advisors to look at all of its options, which could also include selling the company, selling assets and “other initiatives to optimize its capital structure, as well as a number of other alternatives.”

Net sales in the second quarter were down 6.1% to $1.4 billion, including a same-store sales decrease of 6.8%. Neiman Marcus also reported a net loss of $117.1 million, the result in part of noncash impairment charges of $153.8 million. Net income in last year’s second quarter was $7.9 million.

In a conference call to financial analysts to discuss the results yesterday, Karen Katz, Neiman Marcus’ president and ceo, noted that traffic in the retailer’s tourist destination stores was down in the second quarter, due to the strong dollar which drove away many tourists. In addition, Millennials and generation X now constitute 51% of Neiman Marcus’ customer base—a headwind that has enveloped all retailers. “Customers are making fewer trips to the mall and more to websites,” Katz said, and these demographics are putting more thought and consideration into their shopping—including their choice of where to shop.

Whoever may acquire Neiman Marcus, if a sale goes through, will be purchasing an iconic luxury department-store brand, but one also saddled with a high level of debt. According to Neiman Marcus’ balance sheet, long-term debt at the end of the second quarter stood at $4.4 billion.

In January, the company halted plans for an initial public offering, saying in a filing with the Securities and Exchange Commission only that an IPO was “not in its best interests.”

Home & Textiles Today Staff | News & Commentary

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