Neiman Marcus Inches Even Closer to IPO

The luxury department store has selected its underwriters

   

Luxury retailer Neiman Marcus has selected the investment banks for its public offering: Credit Suisse (CS), JPMorgan Chase (JPM) and Bank of America Merrill Lynch (BAC), according to a report in The Wall Street Journal. The pricing terms for the deal have not been set, though.

Founded over a 100 years ago, Neiman Marcus has 41 full-line stores in marquee locations as well as two Bergdorf Goodman stores. The company sells brands like David Yurman, Vince, Giorgio Armani, Theory, Ermenegildo Zegna, Christian Louboutin, Gucci (GUCG), Prada (PRDSY) and Estee Lauder (EL).

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Neiman Marcus also has pushed aggressively into e-commerce and mobile. Keep in mind that last year about 20% of total sales came from online sources. (For more details on the company, you can check out the S-1 filing.)

As should be no surprise, the company’s main private equity sponsors, TPG Capital and Warburg Pincus, want to get liquidity on their investment. They took Neiman private in a $5.1 billion deal back in 2005 and, according to The Journal, TPG and Warburg spent the summer pitching sovereign wealth funds, such as the Qatar Investment Authority. Unfortunately, the parties could not reach terms.

One likely reason: While Neiman Marcus has made great strides since the financial crisis, the growth path is still somewhat moderate. For the full-year ending April 27, revenues came to $4.5 billion — up only 7% — and operating income was up 9% to $428 million.

It was still smart for Neiman Marcus to seek out a suitor. Just look at Saks (SKS), which recently agreed to sell out for $2.4 billion to Hudson’s Bay (HBAYF) — a Canadian operator of department stores. But since the buyout interest was tepid, the company decided to go for an IPO. And why not?

So far this year, the IPO market has been particularly strong and there are no signs of a slowdown. More importantly, investors have been buying up shares of mature companies, like Norwegian Cruise Line (NCLH), Boise Cascade (BCC), Pinnacle Foods (PF) and SeaWorld Entertainment (SEAS).

Something else:  luxury-type IPOs have also performed quite well recently. Michael Kors (KORS) is up 250% and Restoration Hardware (RH) has clocked a return of 185%.

In other words, expect Neiman Marcus to come back to join the ranks of public companies within the next couple months or so.

Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO StrategiesAll 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.


Article printed from InvestorPlace Media, http://investorplace.com/ipo-playbook/neiman-marcus-gets-close-to-an-ipo/.

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