Neiman Marcus is ready to hit the public stage again nearly eight years after TPG Capital and Warburg Pincus LLC acquired the luxury retailer. The company recently filed for an initial public offering valued at $100 million in stock, according to The Wall Street Journal. The timing is certainly right. In fact, high-end retailers including Neiman Marcus and Nordstrom (NYSE: JWN ) are finally starting to benefit from the economic recovery. However, that's no guarantee that there will be strong demand for an IPO.
Package deal gone bad
The news comes after Neiman Marcus reportedly snubbed an offer from private equity firm KKR (NYSE: KKR ) , which was considering an investment in rival upscale retailer Saks (UNKNOWN: SKS.DL2 ) with the hope of later merging the company with Neiman Marcus, according to the Journal. It's understandable why Neiman would look down on the deal.
For one thing, Neiman Marcus is far more profitable than Saks. The former pulled in $140 million in profits on revenue of $4.35 billion last year. Comparatively, Saks earned just $62 million on sales of $3.15 billion during its most recent fiscal year. By turning down a possible merger with rival Saks, Neiman's private equity owners are hoping for a lucrative public offering.
There's no reason Neiman's upcoming market debut can't go the way of Michael Kors (NYSE: KORS ) . Since going public in 2011, the namesake brand has shown impressive momentum. In fact, shares of Kors have nearly tripled from their IPO price of $20 per share. Not to mention the stock is up more than 15% on the year.
However, if Neiman Marcus hopes to have this type of IPO success, it will need to prove that it's capable of strong growth going forward. For example, Kors grew total revenue by 58% in fiscal 2011, the same year it went public. So far, Neiman is on the right track, with improving same-store-sales figures and earnings growth of 13% in its most recent quarter.
Reining in retail stocks
While we wait for a possible public offering from Neiman Marcus, there are plenty of other attractive retail stocks already trading -- the trick is knowing where to look.
The retail space is in the midst of the biggest paradigm shift since mail order took off at the turn of the last century. Only those most forward-looking and capable companies will survive, and they'll handsomely reward those investors who understand the landscape. You can read about the 3 Companies Ready to Rule Retail in The Motley Fool's special report. Uncovering these top picks is free today; just click here to read more.