Neiman Marcus is considering selling itself to its long-time rival, Saks Fifth Avenue, following a possible agreement from PIMCO. This agreement would allow Hudson’s Bay to begin the exclusive due diligence process to evaluate Neiman’s business.
According to the New York Post, the merger of Saks, which currently has 40 stores, with Neiman’s 38 stores, could potentially face antitrust issues. A source with knowledge of the discussion stated, “Neiman’s just had its worst fiscal year since its bankruptcy.”
The retail giant’s sales had began to cool down this year, as luxury spending has also declined. This month, Neiman Marcus eliminated approximately 100 corporate employees, which the company claimed was less than 1% of its workforce. Additionally, a leaked document revealed that Neiman Marcus’s earnings before taxes, interest, depreciation, and amortization had decreased 25% from last year.
Related: Antitrust Class Action Against Luxury Designers Is Dismissed
Neiman CEO, Geoffroy van Raemdonck, has been under scrutiny due to his alleged generous compensation package amidst the company’s cost-cutting measures and staff downsizing. Unknown commented, “Neiman CEO Geoffroy van Raemdonck has come under fire for his generous compensation package while the company trimmed costs including employees’ pensions and pay during the height of the pandemic.”
This is not the first time Saks Fifth Avenue has attempted to buy Neiman Marcus; in fact, this is the third time in the past decade. Unknown commented, “Saks Fifth Avenue has attempted to buy Neiman Marcus three times over the past decade”.
The sale of Neiman Marcus and Saks Fifth Avenue could potentially benefit both companies if all goes through. Van Raemdonck, himself, might benefit significantly from the purchase with it being reported he stands to walk away with $40 million.
The decision to buy Neiman Marcus comes after both companies are experiencing dismal financials due to the pandemic and the decrease in luxury spending. Saks Fifth Avenue and Neiman Marcus have yet to make a statement regarding the proposed purchase, however, this decision carries the potentially to alter the landscape of 14th street luxury shopping.
Source: NY Post
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