Luxury retailer Neiman Marcus reportedly is close to selling itself for about $6 billion, nixing any hopes of seeing a Neiman IPO any time soon.
According to the Wall Street Journal, private equity operators Ares Management and the Canada Pension Plan Investment Board are considering buying up Neiman in the biggest-name retail M&A deal since Hudson’s Bay’s (HBAYF) $2.4 billion acquisition for Saks (SKS), which was struck in July.
In 2005, Neiman Marcus went private in a $4.9 billion deal whose sponsors included TPG and Warburg Pincus. However, the timing was far from ideal — the U.S. plunged into recession a few years later — and as a result, the company took tough actions to cut back on costs and pay down the debt load.
However, the process was not easy. Neiman Marcus talked to KKR (KKR), CVC Capital and various sovereign wealth funds, but were met with tepid interest. That’s because despite its recovery, Neiman’s performance has been lackluster. For instance, for the full year ending April 27, revenues improved just 7% to $4.5 billion while operating income improved 9% to $428 million.
Still, Neiman has a legendary brand, marquee locations (two Bergdorf Goodman stores), access to products — from Giorgio Armani, Ermenegildo Zegna, Gucci (GUCG) and Prada (PRDSY), among others — and its e-commerce business also is growing at a nice clip.
Now, because Neiman’s current suitors are PE firms, it’s very possible we’ll see a Neiman Marcus IPO down the road — but investors likely will need to wait a couple years while the retailer tries to bump up its growth rate.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.