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Neiman Marcus Comes To Agreement With Lenders, Aims To Drive $5 Billion In Total Sales By 2024

Neiman Marcus Comes To Agreement With Lenders, Aims To Drive $5 Billion In Total Sales By 2024

Neiman Marcus has reached an agreement with majority noteholders and term lenders to extend the maturity of the retailer’s term loans and unsecured notes by three years. The plan, if implemented, is expected to provide Neiman Marcus with “ample runway” to execute on and complete its transformation plan, which has been dubbed “Project Rolex.”

Additionally, Nieman Marcus gave a presentation on Project Rolex that laid out the initiative, which aims to drive more than $5 billion in total sales and $700 million in adjusted EBITDA within five years. The company’s roadmap involves three phases:

  • Stabilize in fiscal 2019 and 2020: Neiman Marcus will amplify pockets of existing demand growth, free up cash with cost-out efforts and work to generate financial flexibility;
  • Optimize in fiscal 2020 and 2021: The company will work to increase demand and loyalty from target customer segments, improve its customer experience and optimize its retail model to improve market share and retention; and
  • Transform in fiscal 2020 and beyond: The retailer will create a customer-centric luxury platform to expand relationships with shoppers, create demand for new experiences, services and distribution channels and leverage its assets to expand its business model.

The presentation also discussed the MyTheresa.com e-Commerce unit, which Neiman Marcus transferred to an independent corporate entity held by its private equity owners in March 2018, making the business not subject to the same rules under credit agreements as its other units. Bondholder Marble Ridge Capital LLP later threatened Neiman Marcus with legal action over the transfer, and has urged the retailer to sell MyTheresa.com to pay down debt.

However, the presentation notes that MyTheresa.com generated €303 million in revenue in fiscal 2018 and brought on 177,000 new customers, with room for continuing growth. Additionally, the brand is still gaining traction in the U.S. and China, with 80% of its revenue coming from international e-Commerce. MyTheresa.com also benefits from a loyal core of shoppers, with 26% of its revenue driven by the top 3% of customers.

Neiman Marcus also noted that the company has experienced six consecutive quarters of comparable revenue increases, and that it expects to report another increase of 0.5% to 1% in the fiscal quarter that ended Jan. 26. Several of Neiman Marcus’ recent executive hires have been aimed at maintaining this growth:

  • Katie Mullen, Chief Transformation Officer, was brought on to commercialize new ideas, spearhead growth initiatives, and handle program and change management and corporate communications;
  • David Goubert, EVP of Stores and Retail Experience, will be responsible for creating “personalized, seamless and magical” experiences within Neiman Marcus stores; and
  • Ginger Mollo, Senior VP of Retail Experience - West Coast will tap the experience she gained from 18 years at Apple, where she advanced the culture of the store environment and developed a sales team.
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