US: Neiman Marcus Looking At Options, Hudson’s Bay Considering Move?

Neiman Marcus has announced that it is exploring all options for its future, including a sale, even as it unveiled changes to its capital structure.  The move comes as the department store banner continues to struggle under heavy debts, even as reports emerged of possible new interest from Hudson’s Bay Co.

The company said it will “explore and evaluate potential strategic alternatives, which may include the sale of the company or other assets, or other initiatives to optimize its capital structure, as well as a number of other alternatives.”  It has not put any timeframe on when it plans to complete the evaluation.

Neiman Marcus currently has total liabilities of $6.4bn, and Reuters had earlier reported that it has hired Lazard Ltd to look at ways to improve its balance sheet.  The company also said that it has made changes to its corporate structure, which include making its My Theresa online subsidiary as well as some properties in Virginia and Texas ‘unrestricted’.  This means they no longer come under the same credit agreements as other units of the company.

Meanwhile, the Wall Street Journal has reported that Hudson’s Bay is again looking at a bid for Neiman Marcus, but one which would avoid it assuming any debt.  No details were provided about how such a deal would be structured.

Neiman Marcus was acquired for $6bn in 2013 by private equity firm Ares Management and the Canada Pension Plan Investment Board, but any likely bid is expected to come in below that amount now. Hudson’s Bay, which has previously been linked with a bid for Neiman Marcus, would only note that “we selectively evaluate opportunities to accelerate the company’s strategic growth while maintaining or enhancing its credit profile.”

The announcements came after Neiman Marcus reported a net loss of $117m for its fiscal second quarter (ending 28 January 2017, compared to a net profit of $7.9m last year.  Sales, meanwhile, were down 6.1% to $1.4bn.  The company partially blamed the results on the failure of an inventory management system, which left it unable to fill orders.