Neiman Marcus Files for Initial Public Offering
Neiman Marcus Inc., operator of the luxury department-store chain, filed for an initial public offering in the U.S. after also exploring a private sale.
The company used a $100 million placeholder amount, which is used to calculate fees and is subject to change. Credit Suisse Group AG is leading the sale of the Dallas-based retailer, according to a regulatory filing today.
The IPO would clear the way for Neiman Marcus’s private-equity owners to begin unwinding an investment made before the financial crisis. TPG Capital and Warburg Pincus LLC paid about $5 billion in 2005 to take over the retailer at the beginning of history’s largest buyout boom, data compiled by Bloomberg show. The owners may seek to value the company at $8 billion in a sale, people familiar with the plans said a month ago.
“It shows they are serious about a transaction, whichever way it materializes,” Mortimer Singer, president of New York retail consulting firm Marvin Traub Associates, said in a telephone interview today. “An IPO has more variables -- the price can go up or down and it is harder to get out of your holdings immediately.”
Warburg and TPG plan to sell stock in the offering, reducing their ownership, Neiman Marcus’s filing shows. The filing doesn’t indicate whether the company plans to raise cash from the offering. Those two firms, which led the 2005 buyout group, invested $1.23 billion for an equity stake of more than 80 percent, according to a regulatory filing.
Shareholders of Neiman Marcus took $449.3 million in dividends last year, according to a regulatory filing. If the company were sold at an enterprise value of $8 billion, buyout investors would see a partly realized gain of about threefold on their money including that dividend, data compiled by Bloomberg show. Neiman Marcus carried about $2.7 billion of long-term debt as of April 27.
KKR & Co. weighed an investment in Saks Inc. (SKS), the New York-based department-store operator, and considered seeking a merger with Neiman Marcus as part of that plan, people familiar with the process said in May.
Neiman Marcus and Saks, which had both hired advisers to explore strategic options, could cut costs by closing stores if combined, people familiar with the matter have said. Julia Bentley, a spokeswoman for Saks, declined to comment. Ginger Reeder, a spokeswoman for Neiman Marcus, declined to comment beyond a press release today announcing the IPO filing.
Neiman Marcus operates stores under that brand and the Bergdorf Goodman name. The company, led by Chief Executive Officer Karen Katz, generated $4.5 billion in revenue in the year ended April 27.
Revenue has failed to increase past pre-financial crisis levels at Neiman Marcus, as so-called aspirational shoppers have been slow to return to stores. Luxury spending in the Americas grew 5 percent on a constant-currency basis in 2012, less than half the 13 percent gain of the previous year, Bain & Co. estimates.
At $8 billion including debt, Neiman Marcus would be valued at almost 13 times adjusted earnings before interest, taxes, depreciation and amortization of $623 million in the 12 months through April, data compiled by Bloomberg show. The Ebitda is adjusted to exclude management fees paid to the private-equity firms that control it and other advisory fees.
The retailer didn’t disclose how many shares will be offered or at what price.