Struggling Neiman Marcus Talks Saks Merger

Neiman Marcus
Neiman Marcus | Image by Ken Wolter/Shutterstock

Neiman Marcus is reportedly in talks to sell its assets to a rival luxury retailer for $2 billion.

Dallas-based Neiman Marcus is weighing a possible merger with Saks Fifth Avenue, a deal that would bring together two of the largest luxury retail chains in the United States, the New York Post reported.

The 107-year-old retailer — which also owns New York-based Bergdorf Goodman –- has faced financial struggles in recent years amid a slowdown in its business and falling customer demand for higher-priced items.

As economic conditions in the U.S. worsen, many consumers have had to pull back on big-ticket purchases, causing struggling retailers like Neiman Marcus to take drastic cost-cutting measures to stave off bankruptcy and stay in business beyond the Fed’s current tightening cycle.

Bloomberg reported that during the third quarter, Neiman Marcus had to offer promotions and discounts to attract customers to its stores.

If a deal between the two luxury titans is approved, Neiman Marcus’ estimated value would be about $2 billion, less than half the $5.1 billion it was worth in 2005, the Post reported.

Neiman Marcus has operated under private ownership since it emerged from Chapter 11 bankruptcy in 2020. During the Chapter 11 restructuring process, Neiman eliminated more than $4 billion of debt and $200 million of annual interest expense.

Despite eliminating much of its debt, weaker demand and higher interest rates have placed the company in hot water as it struggles to service its remaining debt balance.

Pacific Investment Management Co. (PIMCO) is the company’s majority investor, with Davidson Kempner Capital Management (DKCM) and Sixth Street Partners named as minority owners. DKCM and Sixth Street are reportedly pushing for the $2 billion merger, while PIMCO is holding out for the company to bounce back, per the Post.

None of the parties involved confirmed the Post’s reporting, with spokespersons for Saks Fifth Avenue and Neiman Marcus declining to comment on rumors or speculation and Neiman’s private equity owners not immediately responding for comment.

Despite its alleged virtue signaling in the recent past, Neiman Marcus’s cultural dominance has significantly faded, with the company failing to attract new customers or entice legacy customers into its physical stores amid a shift in the luxury retail landscape toward online shopping.

The decline can be explained at least in part by the adage “go woke, go broke,” according to Benji Gershon, founder and president of Dallas Jewish Conservatives.

“These companies care about one thing, and that’s profits,” Gershon previously told The Dallas Express, who accused Neiman Marcus of hypocrisy for boasting a commitment to “diversity, equity, inclusion” while allegedly using California sweatshops for cheap labor.

“I wish I could say I’m surprised, but I’m not. The amount of social posturing and marketing dollars spent on DEI initiatives is astounding, and the sole purpose behind it is to create the appearance and illusion of ‘wokeism,’” he said.

Finding a willing buyer could therefore be an adjustment of Neiman Marcus’ business strategy to stay competitive in the current business climate.

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