August 8, 2022

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Neiman Marcus is exploring a possible corporate rejiggering that would split the luxury chain into...

Neiman Marcus is exploring a possible corporate rejiggering that would split the luxury chain into three different businesses, separating its website from its stores and spinning off Bergdorf Goodman, has learned.
Neiman’s plans — which appear to mimic a closely watched strategy disclosed this spring by archrival Saks Fifth Avenue — aren’t expected to result in major changes that are visible to shoppers, according to sources close to the situation.
Instead, Neiman appears to be looking to maximize the growth potential of its website by freeing it from the burden of the retailer’s challenged stores, insiders said. In particular, Neiman executives are eyeing Saks’s success in attracting a $500 million investment this year from a venture-capital firm to fuel the growth of Saks.com.
Indeed, sources said Neiman Marcus has been vetting ways to slice and dice its businesses. It’s talking with AlixPartners, according to people familiar with matter. That’s the consulting firm that Saks hired to help separate its web operations from its brick-and-mortar stores. Macy’s also has recently tapped AlixPartners as it considers spinning off its e-commerce business and Nieman’s itself has worked with Alix on other issues.
Neiman hired JP Morgan earlier this year, as previously reported, to explore a possible sale of Bergdorf Goodman. The investment bank recently presented the plan to hive off the divisions to the luxury department store’s board of directors, a source with knowledge of the situation said.

“JPMorgan spent months and months on this plan and Neiman Marcus just hired people to execute it,” the source said. 
Neiman Marcus didn’t respond to requests for comment. Spokespersons for AlixPartners and JPMorgan declined to comment.

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The moves are being driven by Neiman Marcus’ new private-equity owners — including Davidson Kempner Capital Management, Sixth Street Partners and Pacific Investment Management — which are angling to create a potential exit ramp after consolidating ownership of the chain following a May 2020 Chapter 11 bankruptcy filing at the height of the pandemic, sources said.
In March, HBC-owned Saks split off its e-commerce business into a separate entity and sold a minority stake for $500 million to venture firm Insight Partners, giving the business a valuation of about $2 billion. The idea is for the fast-growing Saks.com site to be taken public in the first half of 2022. 
Neiman Marcus’ first location in New York City — in Hudson Yards — closed last year.Getty Images
Neiman, meanwhile, has lately seen a rash of executive departures under Chief Executive Geoffroy van Raemdonck, even as it has struggled to claw back sales at its 37 Neiman Marcus stores and its Bergdorf Goodman store in Manhattan. Neiman closed its first and only Big Apple store — located at Hudson Yards — last year.
Last month, a former J.Crew and Avon executive, James Scully, was hired as interim chief growth officer along with an interim chief financial officer, Mark Weinstein, succeeding Brandy Richardson who left for Men’s Wearhouse in October. Weinstein, a restructuring expert, had been tapped previously as interim chief operating officer in 2019 and 2020.
Neiman posted a 6 percent increase in same-store sales and a 7 percent increase in online sales for the quarter ended in July, compared with two years earlier, according to a Wall Street Journal report.
Its online sales accounted for a bigger share of total sales than before the pandemic, rising to 35 percent in the fiscal year ended in July from 30 percent in fiscal 2019, The Journal reported in October.
As for Bergdorf, Neiman looked into a possible sale earlier this year, sources previously told . But according to the JPMorgan report, three potential buyers looked and passed on acquiring the Fifth Avenue department store, largely because its sales have not recovered to pre-pandemic levels, sources tell .

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Neiman Marcus CEO Geoffroy van Raemdonck.Patrick McMullan via Getty Image

“Bergdorf Goodman has been challenging to sell because its sales volume and Ebitda is materially less than it was in 2019,” the source with knowledge of the situation told .  
had reported that among the interested buyers was the former landlord of Barneys, Ashkenazy Acquisition Corp., which owns the 22-story building at 660 Madison Ave., where the luxury retailer was located before it shuttered in 2019 amid rising rents.
In July, Neiman Marcus denied that it was looking to sell the storied retailer.
“We have no intention nor are we looking to sell Bergdorf Goodman at this time,” the company told at the time. “We are strategically investing in our business and our brands with the intention of growing and strengthening the company.”
But some industry insiders are doubtful whether Neiman Marcus’ businesses are strong enough to exist independently of each other. 
“The big question is how much value do these businesses have as standalone entities,” one person close to the company told .

 

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