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Neiman Eyeing 3-Way Split? CEO Weighs In

Industry chatter suggests Neiman Marcus could soon go the way of Saks Fifth Avenue and possibly Macy’s and Kohl’s.

The New York Post reported Tuesday that the luxury department store is thinking over a plan that would see the retailer split into three separate businesses. The chain would spin off its luxury Bergdorf Goodman brand and separate the website from the stores, the outlet noted.

Neiman Marcus did not immediately respond to Sourcing Journal’s request for comment.

But in a recent interview with WWD, CEO Geoffroy van Raemdonck and president and chief merchandising officer Lana Todorovich said that the company had no intention of breaking up.

“We know the customer who buys across those channels spends 4.5 times more within a year than a customer who only buys in one channel,” van Raemdonck told WWD. “We are really saying we consider stores, online and the third channel of remote shopping as the one face of Neiman Marcus and Bergdorf Goodman. It’s not different faces or different businesses.”

Pauline Brown, who sits on the board of the Neiman Marcus Group, also told WWD, “Any chatter contemplating spinning Bergdorf Goodman off is just not true.”

At least on the surface, any potential spinoff plans wouldn’t visibly impact shoppers, according to the Post report’s sources.

But on the back end, Neiman may want to maximize digital’s growth potential by freeing e-commerce from the burden of its stores, which underperformed prior to the Covid-19 pandemic. When it filed for Chapter 11 bankruptcy in May 2020, the retailer closed more than 20 stores, including the company’s short-lived flagship in Manhattan’s Hudson Yards.

The report comes only a few weeks after Neiman Marcus Group named three new executive appointments to support the retailer’s ongoing transformation, including senior vice presidents in strategy and execution, people services/ESG and communications.

Post-bankruptcy Neiman is finally in a decent financial position. Although it is a private company, Neiman Marcus posted its fourth-quarter earnings results in September, marking a 6 percent increase in same-store sales and a 7 percent increase in online sales on a two-year basis.

The retailer’s 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. Neiman also reduced its inventory by 21 percent from 2020 levels, and said it saw continued sequential acceleration as it focused on full-price selling.

Neiman said it ended the fourth quarter with total liquidity, including cash and revolver availability, of $959 million. Most importantly, the bankruptcy allowed the luxury retailer to wipe out more than $4.5 billion in debt. At the end of July, the company had total outstanding debt of $1.1 billion, compared with $5.7 billion in 2020.

Neiman Marcus’ new private equity owners, including Davidson Kempner Capital Management, Sixth Street Partners and Pacific Investment Management, are reportedly pushing for the split, according to the Post. A breakup could potentially create a nexit ramp for one or more of the owners after consolidating ownership of the chain following the Chapter 11 filing.

Like both Saks and Macy’s before it, Neiman Marcus reportedly hired consulting firm AlixPartners to help it financially engineer a physical-digital separation.

Despite the booming popularity of e-commerce throughout the Covid-19 pandemic, the decoupling debate comes at a time when more retailers are benefitting from a unified commerce experience.

A potential sale wouldn’t be the first time the retailer offloaded one of its businesses, with Neiman spinning off Mytheresa during its reorganization process in 2020. As part of the deal, Neiman agreed to give creditor groups a stake in Mytheresa through shares of preferred and common stock. The luxury e-commerce retailer eventually went public in the U.S. in January this year.

Earlier this year, reports surfaced that Neiman hired JP Morgan to explore a possible sale of Bergdorf Goodman. But a Neiman spokesperson confirmed to Sourcing Journal that the luxury retailer was not looking to sell the brand at the time.

According to The Post, three potential buyers including former Barneys New York landlord Ashkenazy Acquisition Corp. passed on acquiring the Fifth Avenue department store, largely because its sales had not recovered to pre-pandemic levels.

JP Morgan recently presented the most up-to-date breakup plan to the luxury department store’s board of directors, The Post said.

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