Neiman Marcus’s Uncertain Future Benefitting From Real Estate Superiority

The talk surrounding Neiman Marcus has been circulating for some time now. Much like the rest of the location-based retail, the brand has seen decreasing sales numbers due to a wide group of factors in play. The recent hiring of outside help in order to explore possible options to lower their debt made bankruptcy or sale in some capacity seem inevitable.

However, Fitch Ratings isn’t so sure about that. In a report published yesterday, the agency particularly noted the chain’s limited distribution model gives them a strong advantage comparably to retailers in similar circumstances.

The report details that Neiman Marcus’ “superior and limited real estate positioning protects the company from secular challenges through much of the U.S. mall landscape.” It also adds that their business operations “account for 30 percent of total sales, giving Neiman’s the highest omnichannel penetration among the major department stores.”

“Neiman’s real estate portfolio and the attributes of its business model should enable it to be somewhat insulated, although not immune, from broader market shifts,” the report states.

Most importantly, their inclusion of Neiman Marcus’ lack of immunity, though still preferably positioned, is powerful. The report does come shortly on the heels of the news that Hudson Bay Co. was working towards another bid for the retail chain, giving credence to the feeling that anything is possible at this time.

Fitch Ratings has a point that is heavily substantiated by the actuality of the chain’s real estate standing. That could prove to be the case, allowing Neiman Marcus to bear the evolving retail landscape. Again, it may serve to only prolong the inevitabilities surrounding the reality that much of their competition has already faced.

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