Neiman Marcus Group LLC said on Friday it would withdraw its initial public offering, nearly two years after the upscale department store chain filed its intent with U.S. regulators to go public, as it grapples with weaker customer demand.
Neiman Marcus’ abandoned IPO underscores the challenges facing the high-end retailer, as the broader industry struggles under the weight of competitive pressure from off-price stores and online retailers such as Amazon.com Inc.
Neiman Marcus declined to comment on the reasons for pulling the IPO.
Neiman Marcus, which also operates the Bergdorf Goodman and MyTheresa brands, was acquired by U.S. private equity firm Ares Management LP and Canada Pension Plan Investment Board three years ago for US$6 billion.
The Dallas-based company filed to go public in August 2015, but it soon decided to put these plans on hold as a strong U.S. dollar hurt its store revenue in gateway tourist destinations such as New York, Las Vegas, Los Angeles and Hawaii.
Late 2015 through 2016 was a notably rocky period for IPOs, plagued by market jitters and volatility. Companies only raised US$19 billion through public offerings last year, down 42 percent from US$32 billion a year prior.
As skittish investors became more concerned with companies’ earnings, some of the biggest victims of last year’s IPO rut were private equity-backed, highly-indebted companies such as Neiman Marcus, which had been looking to use IPO proceeds to pay down debt.
As of late October, Neiman Marcus had about US$4.9 billion in debt, including its asset-based revolving credit facility, much of which stemmed from its 2013 buyout. Last fall, lenders allowed it to push out a maturity on its revolving credit line to 2021, under certain conditions, from 2018, giving the company more time to boost sales to repay debt.
Neiman Marcus’s term loan was trading below face value at about 86 cents on the dollar on Thursday, according to Thomson Reuters data, indicating some investor concern about the prospects of the company. Neiman Marcus’ bonds, meanwhile, are trading at 87 cents on the dollar, down about 8 percent from this time last year.
For the 12 months ending September 26, Neiman Marcus reported US$4.95 billion in sales, a decrease of 2.9 percent from the year prior. It also reported a net loss of US$406 million, as compared to net earnings of US$14.9 million a year earlier.
By Lauren Hirsch and Siddharth Cavale
(Reporting by Lauren Hirsch in New York; Additional reporting by Jessica DiNapoli in New York; Editing by Bill Trott)
Photo courtesy of Reuters/Rick Wilking