The Future of Neiman's: Private Equity Owners Mull Timing of IPO

Is the timing right for Neiman Marcus Inc. to go public again?

Burt Tansky

Burt Tansky

Photo By WWD Staff

Is the timing right for Neiman Marcus Inc. to go public again? Some bankers and Wall Street analysts think it is.

Sources close to the company said the high-end retailer is considering an initial public offering, which could occur as soon as the end of summer, although early 2008 appears more likely. Neiman's is run by Burt Tansky and is owned by two private equity firms, TPG and Warburg Pincus.

TPG and Warburg Pincus, which purchased Neiman's in May 2005, are said to have put out "feelers" in the investment community to gauge interest for an IPO, according to market and financial sources.

The usual time frame for equity players to sell an investment is three to five years after they buy it. When Neiman's was sold to the two equity firms, industry observers said at the time that they expected them to sell the retailer faster than that due to activity in the equity and M&A markets.

TPG is no stranger to IPOs as an exit strategy. The company, formerly known as Texas Pacific Group, invested $560 million and acquired a 60 percent stake in J. Crew in 1997. TPG waited nine years before launching an IPO for the preppy retailer in 2006 because it took that long to turn the retailer around. When J. Crew went public, it became the hottest offering in the retail sector. The J. Crew IPO was issued on July 6 at $27.75 and shares have since gained 44 percent, to $39.85 in trading last Friday.

Financial sources said recent concern over the equity markets had created a narrow window for an IPO. One banker said the sooner the better, as sales at Neiman's are still climbing. Ginger Reeder, vice president of corporate communications for Neiman Marcus Group, said Sunday, "We have no announcement to make about an impending IPO." Executives at TPG and Warburg Pincus declined comment for this story.

Since being acquired for $5.1 billion, the specialty retailer, which caters to a well-heeled crowd, hasn't missed a beat. One investment banker said Neiman's had been doing well year-to-year, each year operating off a bigger sales and earnings base than in the prior periods.

For the second quarter ended Jan. 27, operating earnings rose to $127.8 million from $69.7 million a year ago. Adjusted operating earnings gained 23.9 percent, to $145.9 million from $117.8 million, excluding amortization, acquisition costs and noncash charges. Results were bolstered by increased full-price selling and improved margins, the company said.
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