Neiman Marcus Files for IPO

Neiman Marcus, the Dallas-based luxury store, has filed for an initial public offering yesterday. The details on this long awaited registration are still vague, reported WWD, with no confirmation on how many shares will be sold and at what price yet.

Their filing with the Securities and Exchange Commission said up to $100 million would be raised in the offering, but that number could be just a place holder. The timing suggests an IPO could as early as the fall, assuming a bidder with the capitol doesn't take a sudden interest.

Recently there were rumors that Private equity giant KKR wanted to buy Saks Inc. and then merge it with Neiman Marcus into one big luxury department store. But that seems to have been shot down by Neiman's owners, but anything is possible.

"It sends a signal that they're serious about making some move with it," said Bob Haas, head of the Private equity practice at A.T. Kearney, of the filing. "They're probably eager to do something and the IPO is just one option available to them. A merger with Saks is probably still a possibility. If [the stock market] continues to go down and sideways, the IPO will suddenly become less likely."

Neiman's, among a handful of the world's top designer retailers, has bounced back after the recession but it still needs to prove itself on Wall Street.

"They've rebuilt the business to essentially peak prerecession health," said one retail banker. "It's all dressed up now. The [profit] margins are good, not great, so the challenge is, if you think you've already restored the margin to peak margin and there's very little growth, well what is the investor paying for?"

The company, and luxury department stores in general, don't have the obvious growth power that made Michael Kors Holdings Ltd. IPO so successful. But Neiman's said in the filing "that its growth would come from the expansion of its omnichannel capabilities, the e-commerce business, comparable-store sales, smaller stores and proprietary merchandise."

To be more specific, the company could double the amount of Last Call outlet stores and also increase the footprint of their Cusp stores.

"Certainly there is growth," said Arnold Aronson, managing director of retail strategies at Kurt Salmon, of luxury department stores. "Is the growth a continual double-digit as it was...probably not. But there are other ways to attain greater profitability. Certainly there's the e-commerce business, which can be a significant growth vehicle. There are certain selected brick-and-mortar opportunities that will come up."