Luxury Retail Environment Continues To Deteriorate, Niemann Department Store May Be Bought?

The luxury retail environment continues to deteriorate. Some investors say that Neiman Marcus's acquisition valuation may only be 60% of that year's value.

Luxury stores in the US Retailer Neiman Marcus Group Niemann Marcus group is about to release its fourth quarter and year-end performance report. More and more industry sources say Husdon sBay HBC will buy the retailer. But until now, HBC and Niemann have not commented.

HBC CEO Richard Baker openly undisguised publicly that the company expects to gain Niemann's income. HBC is already in capital. Market financing To prepare for the acquisition of Niemann group, but no specific spanaction has yet been made. HBC has recently raised funds in the capital market, suggesting that HBC is likely to launch the buyout plan.

Informed sources pointed out that the specific result is whether HBS or other potential buyers are buying Niemann group quickly, or waiting for the luxury retail environment to deteriorate further, resulting in a further decline in the market value of the Niemann group. The Niemann group 3 years ago is indeed very valuable, but the valuation of the acquisition may be 60% only 3 years ago.

In 2013, Ares Management LLC and Pension PlanInvestment purchased the luxury retailer from TPG and Warburg Pincus at a price of US $6 billion. Some analysts say that in view of the heavy debt of Niemann group, HBC will not buy at a price of US $6 billion, which means the continuous downturn of Luxury Retailing and the continued depreciation of the Niemann group.

According to CapitalIQ data, Niemann group's debt is 8.1 times the profit before interest tax depreciation and amortization, far higher than Nordstrom's 1.9 times, and Messi's department store's 2.4 times, even more than HBC's 6.4 times. Affected by the sluggish retail market and the sluggish tourism industry, the group is experiencing an extremely difficult period. According to analysts, the pre tax profit will be between $80 million and $100 million in the fourth quarter, lower than the profit range of $108 million to $111 million last year. In the third quarter, Niemann group revenue fell 4.2% to 1 billion 170 million US dollars, and its profit dropped to US $3 million 800 thousand from 19 million 800 thousand US dollars in the same period last year.

It is noteworthy that the debt of Niemann group expires in 2018, so the group must raise its sales revenue to get financing. According to the S & P index, the company has a total debt of $4 billion 800 million, and the group will pay interest of $300 million a year due to debt pressure. It is reported that the group's credit will expire in October 2018, the senior secured loan will be in October 2020, and other debts will expire in 2021 and 2028 respectively.

In late June, foreign media reported that group CEOKaren Katz wanted to sell Niemann group and was negotiating terms with Chinese buyers. Niemann group did not comment on the report. According to people familiar with the matter, KarenKatz has met with senior executives of China's Ampang insurance group, and the Ampang group has successfully acquired the WaldorfAstoria hotel in New York. Last year, Niemann group failed to apply for IPO, now the group's IPO plan has been shelved.

According to the data, Niemann group Luxury brand Sales in the department store for more than a year have dropped by 5%, and nearly 81% of the profits slump in this quarter indicates that consumer clothing is slowing down. As online shopping is becoming more and more popular, physical clothing retailers are becoming more and more difficult to attract more customers. The fashion department stores in the United States have been affected by the slowdown in economic growth and dynamic changes in consumer shopping patterns. Consumers are spending more and more on household goods, automobiles, catering, tourism and other experiences, but gradually away from the purchase of luxury clothing.

Karen Katz said earlier: "nowadays, the general situation of the whole fashion retailing industry is that consumers gradually lose interest in shopping for physical stores, whether in traditional department stores or other luxury stores."

The 108 year old Niemann group's operations include Neiman Marcus, Bergdorf Goodman, Mytheresa, Cusp, Horchow and LastCall. In addition to headquarters operated Mytheresa.com, the group is developing neimanmarcus.com business, which covers China.

Unlike other luxury goods companies that expand their market in China, Niemann group is particularly cautious. In those years of the rapid development of the Chinese luxury market, the Niemann group did not enter the Chinese market until 2012, or on the line. In March 2012, the Niemann Group invested in the way of charisma of domestic electric business to test the water. Then its e-commerce platform was launched in China, and the operation center and warehouse were set up in Shanghai. However, after less than half a year, the Niemann Group China electricity supplier division cut half of its staff and closed the Chinese warehouse to the US headquarters for product sales.