High-end retailer Neiman Marcus is planning to list its shares on public stock markets after a decade-long run under private ownership. On Tuesday evening, the company disclosed it filed papers for an IPO, setting a placeholder of $100 million for the amount it plans to raise.
Neiman Marcus, which operates its namesake brand and Bergdorf Goodman stores nationwide, was taken private for $5.1 billion in 2005 by a private equity consortium led by Texas Pacific Group and Warburg Pincus. In 2013, TPG and Warburg Pincus then sold Neiman Marcus to Ares Capital and the Canadian Pension Plan Investment Board for $6 billion, choosing a secondary sale over an initial public offering.
Now, amid a rise in luxury spending and a focus among investors on the real estate assets owned by retailers such as Saks,
The company operates 41 Neiman Marcus stores nationwide and two Bergdorf Goodman stores, in addition to its My Theresa brand for younger consumers in Europe, Asia and the Middle East. It also operates online sales channels for Neiman Marcus and Bergdorf Goodman, which accounted for 24% of total transactions in fiscal 2014.
According to its S-1 filing, Neiman Marcus owns 856,00 square feet of stores and 2.3 million square feet of space subject to ground lease. The company's flagship brand also leases 2.2 million square feet of stores,while Bergdorf Goodman leases 316,000 square feet. Based on in-store transactions, the combined productivity of Neiman Marcus's 43 full line stores was $589 per square foot.
Owned stores include Neiman Marcus' flagship store in downtown Dallas and other locations nationwide, ranging from Beverly Hills to Westchester, Boston, Las Vegas, and Palm Beach, Florida.
According to IPO documents, Neiman Marcus intends to remodel 53% of its stores, including Bergdorf Goodman and its owned stores in California, Massachusetts and Texas.
The capital investment program also forecasts a remodeling of approximately 7% of its over 850 designer shops and increasing the number of designer shops by approximately 20%, in a push to modernize stores, increase productivity, and strengthen relationships with designers. Ultimately, Neiman Marcus believes the spending will "increase customer traffic and generate significant returns."
Neiman Marcus also continues to invest in its security and IT infrastructure after the company suffered a wide-ranging cyber attack in January 2014, where malware collected payment card data from July 2013 through October 2013 in 77 of the company's 75 stores, compromising the information of roughly 370,000 customer cards. The company continues to face class action litigation from the cyber, according to its S-1 filing.
Proceeds from the IPO will be used to repay some of the company's $7.4 billion in debt and for general corporate purposes.
When listed, Neiman Marcus will carry a dual class stock structure. Sponsors Ares and CPPIB own "substantially all" of Neiman Marcus' outstanding shares, according to the company's S-1 filing.
