Sources said on Wednesday that Neiman is not involved in any conversations about selling Bergdorf Goodman.
Considered one of retail’s crown jewels, Bergdorf Goodman outdates Neiman Marcus in the luxury retail history books. Founded in 1899, Bergdorf got its start as a women’s tailor shop eight years before Neiman Marcus arrived on the scene.
One individual said keeping Bergdorf in business preserves Neiman’s presence in New York, particularly after the upscale department store chain closed its Hudson Yards Manhattan flagship in the wake of last year’s bankruptcy. Plus, Bergdorf caters to a very specific clientele that sticks with the retailer through thick-and-thin, regardless of the economics or headlines, one source said.
A Neiman spokesman confirmed Wednesday that the company is not “looking to sell Bergdorf Goodman at this time.”
“We are strategically investing in our business and our brands with the intention of growing and strengthening the company,” the spokesman added.
The luxury department store known as Bergdorf Goodman was founded in 1899 by Herman Bergdorf, who opened a women’s tailor shop in the Union Square area of Manhattan. He was later joined by a merchant, Edwin Goodman, who subsequently acquired an ownership stake in the business. After renaming the store Bergdorf Goodman in 1901, the store relocated to 32 Street, then known as Ladies’ Mile. Goodman ultimately acquired Bergdorf’s stake and moved the business further uptown to the Rockefeller Center area where he introduced women’s ready-to-wear and made the retailer the go-to destination for American and French fashion. The retailer moved again to its current location, which it has occupied since 1928, on Fifth Ave. between 57th and 58th Streets. A men’s store opened across the street in 1990.
Bergdorf Goodman was sold to Carter Hawley Hale Stores (CHH) in 1972. CHH in 1969 acquired Neiman Marcus. In 1987, CHH spun off Bergdorf Goodman and Neiman Marcus to form the Neiman Marcus Group (NMG). NMG was sold in 2005 to two private equity funds, Texas Pacific Group and Warburg Pincus in a $5.1 billion leveraged buyout (LBO). The two investors sold their investment to Ares Management and the Canada Pension Plan Investment Board in 2013 for $6 billion in another LBO. Saddled with debt from two LBOs, Neiman filed for Chapter 11 protection in April last year, but successfully exited bankruptcy in the fall.
In addition to Bergdorf Goodman, NMG also owns the building that houses the original 1928 site that’s now considered the women’s store.
Walter Loeb, a former retail executive turn retail analyst and now a consultant, also believes that Neiman will want to keep Bergdorf Goodman as part of its luxury holdings. NMG also owns Horchow Collection, the mail-order luxury goods business founded by S. Roger Horchow. Horchow—a retail magnate turned Broadway producer, who invested is Les Miserables and later produced Crazy for You and two revivals, Kiss Me Kate and Annie—sold the business to NMG for $117 million in 1988.
But Loeb isn’t so enthralled about the future of retail over the near term. Changes that are underfoot post Covid, as well the possible economic challenges over the next two years or so, fuel his concerns about brick-and-mortar. While he is confident that physical stores will survive and thrive, he also sees more pain ahead before the next upswing in retail growth can begin.
“I believe that everything is up for sale at some point, if the price is right,” Loeb said, citing a mantra he has maintained since the Great Recession of 2008.
For that reason, Loeb isn’t completely ruling out a Bergdorf Goodman sale at some point down the road. He expects European fashion conglomerates like Bernard Arnault’s LVMH Moët Hennessy Louis Vuitton would chomp at the bit if Bergdorf Goodman ever hit the marketplace. “One person who loves high quality American luxury brands is Arnault,” Loeb said, citing to LVMH’s $15.8 billion acquisition of American jewelry firm Tiffany & Co. last year.
Separately, NMG is dealing with a headache at its San Francisco locations. The NMG San Francisco store at Union Square on Tuesday was the latest victim of a smash-and-grab heist.
“The safety and welfare of our associates and customers is our top priority, and we’re relieved to report that no one was harmed in the incident. We’re cooperating with the San Francisco Police Department in their investigation,” a spokesman for NMG said Wednesday.
Criminals previously targeted the company’s Palo Alto store in May in a similar incident.
In fact, shoplifting has been rampant in the San Francisco area. And it’s gotten so out-of-control that it has forced retailers such as Target to cut store hours. Target, which normally closes at 10 p.m., has temporarily reduced operating hours in the Bay Area city, closing at 6 p.m. at some locations. Walgreens has closed at least three stores this year due to the shoplifting, and around 17 stores over the past five years.
While some believe the city’s homeless is part of the problem, the San Francisco Chronicle reported that a May 13 hearing was held to address the problem. At the event, which included retailers and police, San Francisco District Attorney Chesa Boudin indicated that retailers believe “professional thieves” are driving the spike in thefts. Some also point the finger at Boudin for his reluctance to prosecute individuals for retail theft.