Neiman Marcus in talks to merge with luxury archrival Saks Fifth Avenue: sources

Neiman Marcus is weighing a deal that could sell itself to arch-rival Saks Fifth Avenue — a once-unthinkable merger of the twin giants of the U.S. luxury retail industry I found it in the postcard.

Dallas-based Neiman, which owns the eponymous luxury chain, as well as New York’s Bergdorf Goodman, has been looking for a buyer for months as it copes with poor performance, the people said. said.

The 107-year-old retailer could sell for more than $2 billion, insiders estimate, but it was a string of events that ultimately destroyed the company in 2005. That’s less than half of the $5.1 billion it won in a series of debt-driven acquisitions.

As The Post exclusively reported in June, Mr. Neiman’s current private equity owners have been arguing over a possible exit. Two minority investors in Neiman, Davidson Kempner Capital Management and Sixth Street Partners, are seeking an immediate sale.

But Mr. Neiman’s majority investor, Pacific Investment Management (better known as PIMCO), said it wanted to hold longer, arguing that earnings would improve, according to people familiar with the matter. It says.

Neiman Marcus has started to see sales slow this year as luxury spending slows.
Richard Harvath

Neimann’s continued disappointing results have finally prompted PIMCO to consider a potential sale, according to people familiar with the matter. After a board meeting in July, all three owners agreed to consider a potential bid from Hudson’s Bay, owner of Toronto-based Saks Fifth Avenue.

“Niemann just had its worst fiscal year since bankruptcy,” said a person familiar with the debate.

Jeffroy Van Remdonk
Neiman Marcus CEO Jeffroy van Remdonk has been criticized for setting generous compensation while the company cut costs such as pensions and salaries for employees amid the pandemic. ing.
Penske Media (via Getty Images)

In recent weeks, Hudson’s Bay has initiated exclusive due diligence to evaluate Neiman’s business, a source familiar with the negotiations told the Post.

It’s the third time in a decade that Sachs has gone after a smaller but formidable competitor, and the last deal was a disaster, with the company well above the price, people familiar with the matter told the Post.

Neiman CEO Geoffroy van Remdonk is outraged for taking extravagant pay for himself despite laying off employees and cutting pensions, but Sachs pays He plans to walk away with about $40 million in compensation, according to a person briefed on the matter.

Neiman has hired Lazard and JP Morgan to run the sales process, while Saks Fifth Avenue owner Hudson’s Bay is represented by Morgan Stanley and Bank of America.

The flagship store on Saks Fifth Avenue in Manhattan.
Saks Fifth Avenue has attempted to buy Neiman Marcus three times in the past decade, people familiar with the matter said.
DPA/Image Alliance (via Getty Images)

Saks Fifth Avenue declined to comment.

A spokeswoman for Neiman Marcus said it “does not comment on rumors or speculation.”

Mr. Neiman’s private equity holders did not immediately respond to requests for comment.

A merger of 38 Sachs and Neiman stores, which currently operate 40, would almost certainly come under antitrust scrutiny. The companies are likely to argue that the rise of the internet has sharply eroded their dominance in the luxury sector over the past decade, people familiar with the matter said.

Sales at Neiman began to cool earlier this year after riding the height of the pandemic as shoppers stocked up on luxury goods, leading to two layoffs, people familiar with the matter said.

Neiman laid off about 100 employees this month, less than 1% of its total workforce. The company laid off another 500 people in February after paying record bonuses over the past two years.

A sign for Bergdorf Goodman flashed.
New York City-based Bergdorf Goodman is often called the “best jewel” in the Neiman Marcus portfolio.
Christopher Sadowski

Neiman’s financials leaked in June showed profitability had taken a hit compared to last year, when the store was still riding the post-pandemic luxury boom.

Neiman’s EBITDA (earnings before taxes, interest, taxes, depreciation and amortization) was $124 million for the quarter ended April 29, according to Bloomberg, which cited an anonymous source. decreased by 25%. Revenue fell 9% to $1 billion, according to Bloomberg.

Van Remdonk angered employees earlier this year when he told Fortune that the company was more focused on its wealthiest customers, who account for 2% of its customers but 40% of its sales. Some employees called the comments “sophisticated” and said it was up to them to control customer damage.

Jeffroy Van Remdonk
Geoffroy van Remdonk is expected to raise about $40 million if he signs a deal with Saks Fifth Avenue, people familiar with the matter said.
Patrick McMullan via Getty Images

Insiders have also accused van Remdonk of moving to New York City full-time. He did so in March when he sold his Dallas mansion in the upmarket Lakewood neighborhood for more than $2 million.

The house was featured in gorgeous magazine spreads just as Neiman was laying off employees during the pandemic.

Leave a Reply