Neiman Marcus exploring MyTheresa sale

By

Robin Driver

Published
May 1, 2019

Hot on the heels of its investment in luxury resale platform Fashionphile, the Neiman Marcus Group announced on Tuesday that it is considering a possible sale of profitable Munich-based fashion e-tailer MyTheresa.

 
In a SEC filing, the Dallas, Texas-based department store operator, which acquired MyTheresa from founders Christoph and Susanne Botschen, and Acton Capital Partners in 2014, revealed that it “has commenced a process to explore and evaluate strategic alternatives,” for the German luxury fashion platform, further specifying, “No decision has been made to pursue any specific transaction or other strategic alternative, and there can be no assurance that the exploration of strategic alternatives will result in the completion of any transaction.”
 
According to Neiman Marcus, sales at MyTheresa for the nine months ended March 31, 2019, totaled €272.046 million (approximately $311.5 million).

Having previously accused Neiman Marcus of having defaulted on debt agreements with its creditors by transferring $1 billion of MyTheresa assets beyond their reach in December of last year, bondholder Marble Ridge Capital again criticized the retailer’s actions on Tuesday.
 
“The Neiman Sponsors today announced the third step in what Marble Ridge contends is a scheme to place the valuable MyTheresa assets beyond the reach of Neiman's creditors,” stated the investment fund in a release. “As we have communicated in the past, 100% of the valuable MyTheresa assets must be returned to Neiman Marcus.”
 
Marble Ridge further claimed that Neiman Marcus’ recent debt restructuring and poor financial performance should be a source of concern for its stakeholders.
 
Indeed, the retailer also revealed in its filing on Tuesday that it currently expects to report a decline in third-quarter comparable revenues of between 1.3% and 1.9%, a decrease that breaks its six-quarter-long streak of positive comps, while adjusted EBITDA is predicted to be in the range of $119 million to $129 million, down from $143.1 million in the prior-year period.
 
In light of these disappointing results, the retailer reaffirmed its current strategic focus on initiatives that support its multi-year transformation plan. As previously explained by the company, these include accelerating its digital integration and doubling down on experiential innovation, the ultimate goal being for the department store chain to become a customer-centric luxury platform.
 
The recent opening of the 188,000-square-foot Neiman Marcus flagship at Hudson Yards reflects this new approach, boasting a range of digital features, such as a digital styling lounge and digitally-enabled fitting rooms and mirrors, as well as new services and spaces, including a beauty salon, a stage for live performances and a kitchen, where shoppers can take part in demonstrations, tastings and classes.

The company also made a series of executive appointments to support its new strategy in February, bringing David Goubert and Ginger Mollo on board as EVP for stores and retail experience and SVP of retail experience for the West Coast, respectively. 
 
Beleaguered by debt amounting to around $4.6 billion, Neiman Marcus managed to negotiate a three-year maturity extension on its credit facilities and unsecured notes in March, in the hopes that the extra time will give its strategic turnaround a chance to bear fruit.

On Thursday, Reuters reported on the apparent deterioration of loan documents since Marble Ridge's case against Neiman Marcus was dismissed in March, highlighting lender protections eroded as a result of limitations imposed by companies seemingly emboldened by the ruling. 

The Neiman Marcus Group, which aside from its namesake banner also operates Bergdorf Goodman, Horchow and Neiman Marcus Last Call, reported revenues of $1.39 billion in the second quarter ended January 26, 2019. Its net loss for the period totaled $29.0 million.