Executives from Neiman Marcus, which owns stores like this one in King of Prussia, Pa., have been meeting with investment bankers in what may be a prelude to a sale (William Thomas Cain)
By TRACIE ROZHON
For the last year, the chief executive of the Neiman Marcus Group, Burton M. Tansky, known as Mr. Luxury, has been crowing about the consistent double-digit sales growth in his stores and the steady ascent of the company's stock.
Now, Neiman Marcus, with 37 stores and a reputation for fabulous shoes and expensive designer clothing, may be looking to cash in on that performance. Richard A. Smith, 81, the chairman, has let it be known that he is thinking of selling his stock in the company, say several investment bankers.
Through his company General Cinema, Mr. Smith took a big stake in Neiman's parent in 1984, buying convertible shares for $300 million, and the Smith family now controls the company.
Executives from Neiman Marcus met last week with bankers from Goldman Sachs and have been working for months with McKinsey & Company, the consulting firm, on strategic options.
While such meetings are not unusual, the recent flurry of consultations and meetings - Mr. Tansky has been holding court in his office at Bergdorf Goodman this week, employees say - has been duly noted by the retail industry, hungry for any sign of the latest deal.
"This is feeding frenzy time right now," said Arnold Aronson, the managing director of retail strategies at Kurt Salmon Associates. "Everybody's a candidate on the buy or sell side. They're like kids at a party. Who's going to be left out? Who wants to be a wallflower?"
When the sales figures were released last week, the differences between merchants' performance became only more pronounced.
The winners, flush with cash, are feeling pressure from Wall Street to buy; the losers may be ripe for takeovers.
"Apparel firms feel they have to buy aggressively," said Emanuel Weintraub, of the retail consulting firm Emanuel Weintraub Associates, "and they're running out of things to buy."
There is no indication that Neiman Marcus has decided whether it will sell or use its increasingly valuable stock to make an acquisition. Nonetheless, it is one of the many names that were swirling through the densely packed fashion tents in Midtown Manhattan this week, as models showed off designer clothes to retailers from all parts of the country. Mr. Tansky, 66, in New York for Fashion Week, declined to comment yesterday.
Coach, the leather goods company that may have inspired the phrase "accessible luxury" and is another current success, with a fast-rising stock price and excellent holiday sales, is another company that is being discussed in the tents.
With a $10.4 billion market capitalization, Coach has turned down several suggestions to buy much smaller companies, one banker said. Lew Frankfort, chief executive of Coach, told the banker that those prospects were too small "to move the needle," he said.
Andrea Resnick, the company's vice president of investor relations, said yesterday, "We have said publicly that we are not actively looking at making acquisitions. We are focused on our core business and reinvesting in Coach along with being opportunistic purchasers of our own stock."
She added that the company's only addition to the core brand was a 50-50 joint venture with Sumitomo called Coach Japan.
Tiffany, too, has come under scrutiny within the last week, as the company has started to improve, and is considered ripe for a takeover.
Mark A. Friedman of Merrill Lynch, in a report at the beginning of January, said that while holiday sales in Japan were still down 7 percent, sales in the United States were up 8 percent from the same period in 2003. On Feb. 1, he lowered his rating on Tiffany to neutral from buy.
Tiffany's stock has been on a roller coaster for the last year, yesterday closing at 30.86, near its 12-month low of $27.10.
Is Tiffany's for sale?
Mark L. Aaron, the head of investor relations at Tiffany, declined to comment on "market rumors."
What about Nordstrom, the most successful of the middle-market department stores? Could Nordstrom, with its own young family leadership, be interested in Tiffany? Or in the Saks Department Store Group, the less ritzy part of the empire, which includes the Proffitt's department stores? Representatives of Nordstrom and Saks declined to comment.
At the moment, Neiman Marcus appears to be the real prize and the subject of most of the buzz.
The company, Mr. Aronson said, would be "a coveted but expensive prize, for either a strong strategic buyer or for a financial trophy hunter."
"Neiman's is the clear-cut leader in the luxury retail channel, and is at its apex right now," he said. " It would literally fetch a king's ransom."
Class A shares of Neiman Marcus closed yesterday at $70.50, down 52 cents, but close to its 52-week high of $72.82 on Dec. 22 - and up 47 percent from its low of $48 in May. Its market capitalization is about $3.4 billion.
According a former luxury goods executive, Neiman Marcus was offered to LVMH Moët Hennessy Louis Vuitton several years ago and LVMH was interested, fearing that its rival, Gucci, would grab it. But Neiman Marcus's performance at that time was nothing close to its current one, and the stores looked less than exciting, the executive said. A spokesman for LVMH declined to comment.
Still, Bergdorf Goodman, which the Neiman Marcus Group owns, may be the hardest part of any deal. Bergdorf's, which Neiman Marcus does not customarily break out, is believed to be doing worse than the Neiman Marcus chain.
During this era of retail consolidation, the winners and the losers are only getting clearer with every month's comparable sales figures.
As the market capitalization of the winners grow, acquisition or divestiture becomes not only attractive but mandated, analysts say. "If Peter Boneparth could buy Barneys, there's certainly no limitation," said one long-time retail consultant, referring to Mr. Boneparth, the chief executive of the Jones Apparel Group, who in December paid $400 million for Barneys New York, the chicer-than-chic store chain.
There is a common feeling among analysts and investment bankers and retailers that this is the time to make a deal.
Mr. Aronson of Kurt Salmon noted the well-reported feelers sent out by the Federated Department Stores to the May Department Stores, whose chief executive, Gene Kahn, was ousted last month. One retailing executive said that Federated had been seeking to buy Marshall Field's even before Mr. Kahn's departure, hoping that May would let it go for less than the $3.4 billion it paid nine months ago.
"The luxury companies are all selling at good multiples," said Marvin Traub, the former chairman of Bloomingdale's, who runs the consulting firm that bears his name. "So it's an opportune time for some to monetize."
That is industry-speak for "sell."
Andrew Ross Sorkin contributed reporting for this article.
No comments:
Post a Comment