Neiman Marcus may soon be up for sale. The luxury retailer's owners, private equity firms TPG Capital and Warburg Pincus, have been laying the groundwork for the chain to go public since last year, but are now considering an outright sale, Bloomberg reported on Sunday (May 5).
The move isn't a fire sale. The two owners bought Neiman Marcus Group in 2005 for $5.1 billion and have held onto it three years longer than is typical with a retailer. With the economy improving and Neiman's in-store and online sales increasing as well, the firms may be trying to get as much as $8 billion for the 40 Neiman Marcus stores and two Bergdorf Goodman stores in New York.
If no buyer is found and an IPO doesn't look like it will be successful, TPG and Warburg Pincus may consider a dividend recapitalization—having Neiman Marcus take on more debt in order to pay a dividend to investors.
To be clear, Neiman Marcus hasn't completely recovered from the one-two punch of being taken private, followed almost immediately by the recession. Last year the retailer reported $4.35 billion in revenue, down from $4.6 billion in 2008. Bloomberg estimates the company's debt is $2.71 billion.
But considering how some chains have fared over the past few years—for example, Best Buy's (NYSE:BBY) foray into Europe, in which Best Buy originally paid $2.15 billion for a partnership it eventually had to pay another $600 million to unwind—the chance of cashing out at a 50 percent profit certainly makes bricks-and-mortar retail (at least the luxury variety) look a lot more appealing.
- See this Bloomberg story
Best Buy Bails Out Of Europe, But It's Not A Complete Loss
NeimanMarcus.com's fake faux-fur fiasco draws real 20-year consent agreement
Neiman Marcus Know-It-All App May Require A Different Kind Of Associate