Dallas, TX, March 17--Capitalizing on a white-hot luxury market, Neiman Marcus, the department-store retailer synonymous with status shopping, said Wednesday it may put itself up for sale.
The Neiman Marcus Group Inc. said that it is "exploring various strategic alternatives to enhance shareholder value," including selling itself, but that it might end up doing nothing.
The retailer's stock jumped on the news, as investors considered the prospect of a bidding war for the company. Neiman Marcus' Class A shares rose $11.39, or 15 percent, to $86.14; and Class B shares rose $12.60, or 17 percent, to $84.80 -- both 52-week highs -- to close Wednesday on the New York Stock Exchange.
Shares of Neiman Marcus have roughly tripled in the past two years, as Neiman's well-heeled customers have been among the first to benefit from an improving economy, snapping up such items as Prada handbags and Manolo Blahnik shoes.
"Certainly Neiman's is at the top of their game, and if ever there were a time to sell, this would be it," said Allan Ellinger, senior managing director at MMG, a New York investment banking company that specializes in the apparel industry.
Michael Appel, a retail expert at the corporate restructuring firm Quest Turnaround Advisors, said Neiman's 81-year-old chairman, Richard A. Smith, and his family -- who together controlled 12.7 percent of the company's common stock in November -- are sharp investors who have watched a flurry of other acquisitions and wonder if they can cash in.
"They are probably testing the marketplace, where there is a lot of capital chasing not that many great deals," Appel said. He said Neiman's financial performance makes it the most attractive U.S. luxury retailer.
Last year, the company earned $205 million -- nearly double the year before, while sales rose 14 percent to $3.55 billion. Neiman Marcus's same-store sales -- sales at stores opened at least a year -- continue to beat Wall Street forecasts. Same-store sales in February rose a better-than-expected 7.7 percent from a year earlier.
The Neiman's announcement comes as deal-making mania appears to be taking hold in the retail sector. Federated Department Stores Inc. has agreed to buy May Department Stores Co., and Saks Inc. may sell or spin off its middle-market department store division in order to concentrate on its luxury unit, Saks Fifth Avenue.
Analysts said potential buyers for Neiman's could include European luxury goods makers such as LVMH Moet Hennessy Louis Vuitton SA, North American private-equity firms or Asian investors.
"I hope they don't sell. They're special," said Terry Pellow as she clutched two Neiman bags Wednesday at the flagship Dallas store, which opened in 1908. "Foley's is going to be Macy's. Pretty soon, everything is going to look alike."
Pellow said she switched from Saks to Neiman's seven years ago, and now she and her three grown children buy all their clothes and many Christmas gifts from the same Dallas salesman. "I don't want to lose that," she said.
Jennifer McGill, a Dallas homemaker, called Neiman's a boutique that happens to be a department store.
"They go out of their way to find special sizes or designers, and if they don't have it, they'll deliver it to your home from another store," she said. "Neiman's is a Dallas institution and I'd hate for it to change."
Since its founding in 1907, Neiman Marcus has endeared itself to wealthy shoppers by sparing no expense to fill its stores with top-quality women's and men's fashions, jewelry and other luxury goods. The stores have been known to dote on shoppers, putting on lavish special events and maintaining high levels of service.
