National Jeweler Network

Market Developments

Neiman Marcus sold for $6 billion

2013-09-09

Dallas--Private equity firm Ares Management LLC and a Canadian pension plan are the new owners of luxury retailer Neiman Marcus, making it the second upscale department store chain to change hands in less than two months.

According to a statement circulated Monday, Ares and the Canada Pension Plan Investment Board (CPPIB) purchased the Dallas-based department store chain from its current owners, a group of investors led by TPG Capital L.P. and Warburg Pincus, for $6 billion.

Ares and CPPIB will retain an equal economic interest in the retailer while Neiman Marcus management, led by CEO Karen Katz, retains a minority stake. The transaction is expected to close in the fourth quarter 2013.

Back in June, Neiman Marcus filed a registration statement with the Securities and Exchange Commission for an initial public offering (IPO). The registration, however, contained a number of blanks--it did not state how many shares will be sold or on which exchange the retailer’s stock would trade--causing some to speculate that the private equity-owned retailer was just trying to keep its options open while attempting to find a buyer.

Neiman Marcus has 79 stores: 41 Neiman Marcus stores, two Bergdorf Goodman locations, both in Manhattan, and 36 Last Call outlet stores. Online, it sells under these three brand names, in addition to Horchow.  It is one of the largest sellers of fine jewelry in the United States, ranking No. 12 on National Jeweler’s most recent list of $100 Million Supersellers.

The chain’s transfer from one set of investors to another is the second ownership shift for a U.S.-based luxury department store chain in less than two months. In late July, Hudson’s Bay Company paid $3 billion to acquire Neiman Marcus rival Saks Fifth Avenue. HBC owns Lord & Taylor in the U.S., as well as Hudson’s Bay and Home Outfitters in Canada. 

Los Angeles-based Ares’ portfolio of retail investments include 99¢ Only Stores, Floor & Decor Outlets of America and Smart & Final Stores LLC, a California-based warehouse-style discount retailer.

In a statement, David Kaplan, Ares senior partner and co-head of the company’s Private Equity Group, said they are “delighted” to join with CPPIB as a long-term investor in Neiman Marcus and plan on putting money into the company “to ensure Neiman’s long-term position as the unparalleled leader in luxury retail.”