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Neiman Marcus reportedly looking for a financial saviour

By Angela Gonzalez-Rodriguez


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High end department store chain Neiman Marcus is at the lookout for either a buyer or an investor after definitely ditching the idea of a potential flotation in New York. The company’s quarterly profit has dropped 81 percent in the last quarter.

As first reported by the ‘New York Post’, Neiman Marcus would have definitely forgotten about floating and is casting around for a buyer, or investor.

The 108-year-old retailer, owned by Ares Management and Canadian Pension Plan Investment Board, had filed for an initial public offering in August last year. However, published Reuters back then, the IPO had been pushed to 2016 due to volatile stock markets.

In the meantime and despite the fact that the line of credit wouldn´t mature until October 2018, the company has had three consecutive quarters of sales declines, so the trajectory isn’t promising, publishes Bloomberg.

Sluggish sales, mounting debt and rising competition corner Neiman Marcus

Sluggish sales and a hefty 5 billion dollars debt are allegedly the main reasons behind the retailer’s decision.

In this vein, it is worth recalling that, earlier this month, Neiman Marcus Group Ltd LLC [NMRCUS.UL] reported its third consecutive quarterly drop in sales at established stores. The sales’ decrease led to an 81 percent fall in profit amid a slowdown in apparel spending.

Market rumour has it that while in China, the company’s CEO met with executives of Anbang Insurance Group, But Anbang passed on an offer to buy all of Neiman, according to the source quoted by Bloomberg.

Last August, Neiman announced plans to file an initial public offering, but it has had delayed that very same IPO since then. “The problem is they have so much debt,” said a source to the New York-based paper. “The equity is not worth anything” after factoring in the debt load — equal to about 8 times earnings before taxes, depreciation and amortisation. Cash raised from the stock sale would have gone to pay down its debt.

In that sense and as published by the ‘New York Post’, a retail banker said, “Neiman could soon be facing a going-concern audit issue. Accountants have to take a look forward when doing the year-end audits. They will see maturities and could say, ‘We are not sure they will be able to address the refinancing.’ Neiman needs to be on this now.”

Image:Neiman Marcus Web

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