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Neiman Moment

11 June 2019 by jbchevrel

Neiman Marcus Group LLC (NMG) is a department store chain offering mostly prime fashion stuff. It is also one of the widest names in the CDX HY index, paying around 55%. Today its results came not far from expectations. Net sales came up +9.2%y and beat estimate, with gross margin stable 35%. Adjusted EBITDA down -12% y. The area of growth was MyTheresa (revenue +23.6%y). It will be included in consolidated balance sheet and p&l statement going forward. That is the innovative/online arm, which can impact customers globally, and aimed specifically at younger customers, but also mostly positioned on women luxury fashion. The company reported a net loss of -$88M vs +$326M same period previous year. That EBITDA is to put in regard with (i) secured debt $3.4B (ii) total debt $5B and cash thin less than $40M. So net net, leverage is 7.5x on secured 11x on total basis. The credit markets seemed not too surprised by the release, with CDS (5y) still paying around 55% (mid) on our London close. Cash-wise, term loans 1L 7 1/8 28s ~ 80 2L 8 24s ~ 90 3L 8 24s ~45 and unsecured 8 21s ~ 60.