Neiman Marcus Group, the struggling luxury department-store chain that scrapped plans in January for an initial public offering, is considering a sale of the company instead.
The storied Dallas-based retailer is in talks with Hudson’s Bay Co., the owner of Saks Fifth Avenue, about a buyout, according to The Wall Street Journal. The deal would exclude Neiman Marcus’ nearly $5 billion in debt, the newspaper reported.
The takeover speculation followed Neiman Marcus’ announcement Tuesday that it’s working with financial advisers on a review of its strategic options, which may include selling part or all of its business. The company also wrote down its brand and other assets by $153.8 million last quarter and rejiggered its corporate structure to give it more financial flexibility.
Hudson’s Bay has also held talks about acquiring Macy’s, people familiar with matter said earlier this year. With Neiman Marcus now available, the suitor has redirected its attention, according to the Journal.
An acquisition of Neiman Marcus would fulfill a long-held dream by Hudson’s Bay Chairman Richard Baker, according to Steven Salz, an analyst at M Capital Partners. Baker, who was chief executive officer until early 2015, has signaled his interest in the upscale retailer many times, Salz said.
Hudson’s Bay, based in Toronto, declined to comment on possible talks with Neiman Marcus.
“Generally speaking,” spokeswoman Jen Vargas said in an email, “we selectively evaluate opportunities to accelerate the company’s strategic growth while maintaining or enhancing its credit profile.”
The upscale chain, which recently opened a new Fort Worth store at The Shops at Cleakfork, is reeling from slower mall traffic and a broader shift away from department stores. Same-store sales — a key benchmark — fell 6.8 percent in the second fiscal quarter, which ended Jan. 28. The company posted a net loss of $117.1 million in the period, dragged lower by the writedown of its brand. It had reported a profit of $7.9 million in the year-earlier quarter.
The company has about $4.9 billion of debt outstanding, some tied to its $6 billion acquisition in 2013 led by Ares Management and the Canada Pension Plan Investment Board. They bought the chain from TPG Capital and Warburg Pincus, which acquired Neiman Marcus for about $5 billion in a 2005 leveraged buyout.
Neiman Marcus’ customer base is aging, with many younger shoppers making more of their purchases online. But it’s attempting to freshen its image: Last year, Neiman Marcus teamed up with e-commerce startup Rent the Runway in a bid to attract more millennials. The company has been opening in-store boutiques that let customers rent clothes and accessories.