Neiman Marcus Bonds Plunge After Same-Store Sales Decline

  • Luxury retailer posts $10.5 million first-quarter loss
  • Department-store chains struggling to lure holiday shoppers

Neiman Marcus Group Inc. bond prices tumbled after the retailer reported a first-quarter loss and a decline in a key sales benchmark, joining other department-store chains struggling to lure holiday spenders.

Same-store sales at the Dallas-based chain fell 5.6 percent in the three months ended Oct. 31, Neiman said in a statement Monday. The retailer, known for its elaborate Christmas catalog, had a loss of $10.5 million, compared with $196,000 in profit in the year-ago period.

Department stores have been posting tepid results as consumers shift money toward services, experiences or savings. Macy’s Inc. and Nordstrom Inc. cut their annual profit forecasts after disappointing earnings, while Hudson Bay Co. posted an unexpected adjusted third-quarter loss last week as a stronger U.S. dollar pummeled tourist spending at its Saks Fifth Avenue chain. Neiman also was buffeted in the current quarter after its website crashed during the two days following Thanksgiving, one of the most important shopping periods of the year.

“We’re seeing luxury spending take a little bit of a pause,” said Liz Dunn, chief executive officer of Talmage Advisors, a retail and brand consulting company. “Everybody’s struggling right now. People are spending their money elsewhere, and the weather has been a really big challenge for everybody.”

Unusually warm temperatures have left consumers reluctant to snap up the winter clothes that line shelves and racks in much of the U.S. this time of year. Still, Dunn added, Neiman’s concentration of stores in the southern U.S., where the economy is healthier than in the Northeast, should make it less affected than some competitors.

Neiman Marcus’s $960 million of 8 percent debt maturing in 2012 plummeted 11.75 cents to 68.75 cents on the dollar at 2:24 p.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The notes are trading at a yield of 16.6 percent, or 14.9 percentage points more than benchmark rates -- a level that indicates distress.

The more-than century-old retailer filed to go public in August, just two years after Ares Management LLC bought it in a $6 billion leveraged buyout. The luxury department-store chain traded as a public company from 1987 to 2005 and had previously filed to go public in June 2013 under previous owners TPG Capital and Warburg Pincus LLC. Neiman also owns the Bergdorf Goodman luxury stores and the off-price Last Call clearance centers.

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