Neiman Marcus has decided not to move forward with its planned initial public offering to list its shares, an acknowledgement that the luxury retailer that has been struggling would likely only receive low prices for its stock.
The operator of department stores, which has posted five consecutive quarters of dropping comparable sales, including a big 8% drop in its last quarter, asked the Securities and Exchange Commission’s permission to withdraw its IPO registration.
The request arrives about a year and a half after Neiman filed with the SEC to go public, which is an unusually long period to have an IPO filing pending which is a big sign of the limited appetite in the market for such an IPO.
In its filing with regulators, Neiman said that it was not in the company’s best interests to move forward with the IPO offering that had been planned.
Since the IPO filing in 2015, which was one year after Ares Management a private equity company and Canada Pension Plan Board purchased Neiman for a price of $6 billion, the fortunes of the retailer have dropped.
Neiman, which years earlier had been publicly traded, was acquired during 2005 for a price of $5.1 billion by a pair of private equity companies that padded returns by taking out large dividends and saddling the retailer with debt to finance them.
Poor results by Neiman are even more shocking considering the boom in the stock market. A boom usually will propel luxury spending.
Large investments by Neiman have been made in e-commerce and in the expansion of its discount chain Last Call.
However, Neiman admitted that luxury shoppers are tougher to win over currently than any time prior, more impatient to purchase items viewed on runways and not as willing to wait months for the products to arrive in stores.
In addition, the internet made comparison shopping much more easier which eroded shopper loyalty. Neiman is not the only luxury brand hurting at this time as both Macy’s Bloomingdale’s and Saks Fifth Avenue owned by HBC are facing problems that are very similar to those of Neiman.
The retailer lost $258 million over its past five fiscal years and the most recent three-month period even though the environment for luxury has been good.
However, the losses, added to the increasing declines in sales made the company’s IPO more unlikely.