Sold: Luxury retailer Neiman Marcus

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Neiman Marcus, a well-known luxury retailer based in the United States, has been purchased by Ares Management LLC and the Canadian Pension Plan Investment Board following an initial public offering this past June. The two organizations will pay $6 billion US dollars for the retailer, a price based on what was described as a conservative forecast of the retailer’s potential growth.

CPPIB Senior Vice President of Private Investment André Bourbonnais explained the decision, commenting that the brands held by Neiman Marcus, as well as the chain’s Manhattan real estate, were what really tipped the scale in favor of buying this company instead of one of the other’s currently up for consideration. Bourbonnais stated “these iconic brands don’t really come on the market very often”.

He continued on to comment that  while the US has hit some difficult economic times, Neiman Marcus has always been a tough company able to weather those storms.

Neiman Marcus’ owners had been considering an IPO for a while now, as revenue levels have never been the same since the financial market crisis in 2008. The luxury sector in general tends to take longer to recover after occurrences like this, as less expensive substitutes are easy to find. Necessities like groceries tend to recover quicker.

41 stores are run under the Neiman Marcus name across the United States. At the end of the fiscal year ending in July 2012, the company’s revenue rose 8.6% to $4.35 billion. While there are no current plans for Neiman Marcus to branch out into Canada, this may change along with the brand’s management.

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