Shoppers enter and exit Neiman Marcus at the King of Prussia Mall in King of Prussia, Pennsylvania, on December 8, 2018.
Marcos Makela | Reuters
ORLANDO, Fla. – As rumors swirl about whether Saks Fifth Avenue will acquire Neiman Marcus, Neiman's CEO told CNBC there is “no need” to sell the business, adding that it is unlikely to change hands in the next five years. .
Neiman's biggest competitor and rival has reportedly made a series of offers to acquire it over the years, most recently making a $3 billion offer that was rejected, the Wall Street Journal reported in December. The takeover attempt comes as department stores struggle to remain relevant, while many shoppers opt to buy directly from their favorite brands. It also comes as the luxury industry restarts after a surge in demand during the Covid pandemic that has begun to ease for some.
Some people close to the companies have told CNBC that a merger between the two is inevitable and that it is a question of when, not if, it will happen. But Neiman CEO Geoffroy van Raemdonck said there is currently “no process in place to sell the company.”
“In the history of time, there have been multiple conversations for maybe two decades, from every side that looked at it, and it hasn't happened,” van Raemdonck told CNBC on Tuesday during the ICR Conference in Orlando. “What I can say is that our shareholders have no need to sell the business because we have billions of liquidity available, we are profitable and we are reporting results that are in a good place and can only get better.” “As we execute our strategy and the economy recovers, there is no urgency on our part.”
Since Neiman Marcus filed for bankruptcy in 2020, Pacific Investment Management, Davidson Kempner Capital Management and Sixth Street Partners have owned the luxury retailer. Over time, those owners will look to divest themselves of the business, but van Raemdonck said it won't be anytime soon.
“In the future, they will sell and that future is probably the next five years. Sell or go public or do something,” van Raemdonck said. “There will always be a lot of heat when you are an owner, when you are private and owned by non-natural holders, but there is no process to sell the company at this time and if anyone has interest, we will definitely listen to them.”
The decision will largely depend on Neiman's owners. They have not yet received an offer that was large or attractive enough to move the needle, a source familiar with the matter previously told CNBC.
During the recent holidays, comparable sales trends at Neiman declined by single digits compared to last year, while comparable sales trends at the stores remained stable compared to the prior period, the company said in a statement. press release on Tuesday.
In the quarter leading up to the holiday season, Neiman saw a slowdown in demand in “all facets” of its business spanning all geographies, all channels and all customer types, van Raemdonck said. He called the luxury retail environment “volatile.”
If Neiman were to merge with Saks, the companies could cut costs, negotiate better terms with suppliers and perhaps create a better shield against changing industry trends that have diminished the relevance department stores once had.
