Does Neiman Marcus make sense for Hudson’s Bay?
Hudson’s Bay Company, unable to conclude a deal to acquire Macy’s, Inc., now has its sights set on the Neiman Marcus Group, according to reports.
Neiman Marcus has been exploring strategic alternatives coming off six straight quarters of declining sales while dealing with $5 billion in debt. A deal with Hudson’s Bay would help cut costs for Neiman Marcus, which presumably, would be in a better position to achieve a turnaround.
Hudson’s Bay, the owner of its namesake Canadian department store chain as well as Lord & Taylor, Saks Fifth Avenue and German department store chain Galeria Kaufhof, will need to be creative to make a deal for Neiman Marcus work. It’s likely, according to a Wall Street Journal report, that the current owners of Neiman Marcus, Ares Management and Canadian Pension Plan Investment Board, will end up with a stake in the combined company should a deal be reached.
The Dallas Morning News reported on a conference call yesterday with Neiman Marcus CEO Karen Katz.
“Customers are making fewer trips to the store and the mall and more trips to the web. They want newness, exclusivity and the best price,” Ms. Katz said. “Driven by these expectations, and thanks to the information available to them on the web, more and more we are seeing our customers shop multiple stores or websites, not just ours.”
Neiman Marcus’s problems integrating new systems, such as inventory tracking, have negatively affected revenues, according to the company’s CEO.
Former Saks CEO Steve Sadove thinks a deal between Hudson’s Bay and Neiman Marcus makes sense.
“In a tougher luxury environment, you need more scale to do things like data analysis, marketing and e-commerce,” he told the Journal. “There are substantial synergies between these companies and it makes a lot of sense for them to combine.”
Mark Cohen, the director of retail studies at Columbia Business School, doesn’t see the point of a Hudson’s Bay and Neiman Marcus deal.
“I look at this just as moving the deck chairs around on the proverbial Titanic,” he told The New York Times.
- Hudson’s Bay to Buy German Department Store Chain Galeria Kaufhof From Metro – The Wall Street Journal
- Neiman Marcus, Dallas’ iconic luxury retailer, puts itself up for sale – The Dallas Morning News
- Hudson’s Bay and Neiman Marcus Are Said to Be in Merger Talks – The New York Times
- As Neiman Marcus weighs a sale, a possible buyer emerges – USA Today
DISCUSSION QUESTIONS: Does a deal between Hudson’s Bay and Neiman Marcus make sense to you? What would you expect Hudson’s Bay to do with Neiman Marcus if it were to acquire the luxury department store retailer?