Neiman Marcus has pulled the plug on its plan to list shares on a stock exchange, a tacit acknowledgement that the struggling luxury retailer would probably only fetch bargain basement prices for its shares.
The department store operator, which has reported five straight quarters of declining comparable sales, including a whopping 8% drop last quarter, asked the U.S. Securities and Exchange Commission for permission to withdraw its initial public offering registration. The request comes 17 months after Neiman, which also operates the Bergdorf Goodman store in Manhattan, filed with regulators to go public, an unusually long time to have a pending IPO filing in a sign of limited market appetite for such a listing.
“It is not in its best interests to proceed with the initial public offering contemplated by the Registration Statement at this time,” Neiman said in its regulatory filing.
Since that 2015 IPO filing, which came a year after private equity firm Ares Management LP (ARES.N) and Canada Pension Plan Investment Board bought Neiman for $6 billion, the retailer’s fortunes have slipped. (Neiman, which had been a publicly traded company years earlier, was acquired in 2005 for $5.1 billion by two private equity firms which padded their returns by taking large dividends and saddling Neiman with debt to finance them.)
Neiman’s poor results are all the more shocking given the stock market boom (something that typically propels luxury spending), Neiman’s large e-commerce investments and the expansion of its Last Call discount outlet chain.
But as Neiman has admitted, luxury shoppers are harder to win over now than before, more impatient to buy items they see on the runway and less willing to wait eight months for those items to be in stores. And the internet has made comparison shopping that much easier, eroding shopper fealty. To be fair to Neiman, rivals Nordstrom (JWN), HBC’s Saks Fifth Avenue and Macy Inc’s (M) Bloomingdale’s are facing similar problems.
“Our core customer is visiting us a little less frequently and customers in general are a little less loyal to any one retailer,” Neiman Marcus CEO Karen Katz admitted to investors last month.
The retailer has last a total of $258 million in losses in the last five fiscal years and most recent quarter despite what has been a good environment for luxury. But those losses, coupled with deepening sales declines made an IPO increasingly unlikely.
At the same time, its buyers will have a harder time flipping a retailer for which they paid so dearly, especially with little sign of improvement in sight for the business.