12:58 PM CST on Wednesday, March 16, 2005

By MARIA HALKIAS / The Dallas Morning News

A Texas retail jewel is up for sale.

Brad Loper / DMN

A patron stands outside the Neiman Marcus store at North Park Mall in Dallas.

Luxury leader the Neiman Marcus Group said today that it is exploring various strategic alternatives to enhance shareholder value, including the possible sale of the company.

The company hired Goldman Sachs & Co. as its financial adviser.

Spokeswoman Ginger Reeder said there is no time frame set and the process may not result in a specific transaction.

Division heads in Dallas, Irving and New York are holding meetings with their staffs at 10 a.m. this morning.

Neiman Marcus had sales last year of $3.5 billion. It’s profits and stock price are at record levels and its performance has outpaced rival Saks Fifth Avenue in the luxury specialty store business.

The company operates 35 stores and 14 Last Call outlets. It owns two Bergdorf Goodman stores in New York City.

It has a successful Internet and catalog business that includes Horchow. Last year, it sold its Chef’s Catalog to Pikes Peak Direct Marketing Inc.

Neiman also owns a 51 percent interest in Gurwitch Products LLC, which distributes and markets the Laura Mercier cosmetics line. The company also owns a 56 percent interest in Kate Spade LLC, a manufacturer and retailer of high-end designer handbags and accessories.

In February, separate news reports said that the Dallas-based luxury leader could be discussing a sale or acquisition.

At that time, Ms. Reeder said that it is "the company's policy not to comment on rumors."

But acquisition rumors — and some actual acquisitions — across the retail spectrum have kept Wall Street buzzing for most of the year.

Kmart Corp.'s pending acquisition of Sears Roebuck and Co. raised awareness in the industry that perhaps more deals are possible as many believe too much capacity exists in retail, particularly in the department store business.

The pending deal between Macy's and Bloomingdale's parent Federated Department Stores Inc. and May Department Stores Co, operator of Foley's and Lord & Taylor, also was rumored long before the companies announced a deal. Both companies went after Marshall Field's last year when Target Corp. put it up for sale and May emerged the winner of Chicago's venerable chain.

In early February, The New York Times, citing unidentified retail executives, posted a story on its Web site saying that Neiman executives had spoken with investment bankers at Goldman Sachs "and have been working for months with McKinsey & Company, the consulting firm, on strategic options."

Fashion bible Woman's Wear Daily in an early February edition also reported that the Smith family might be "looking to sell all or part of its majority stake in Neiman Marcus if the price is right."

However, the Smith family doesn't own a controlling interest in Neiman Marcus. The Boston family owns a 12.7 percent stake, according to Stacie Shirley, vice president of investor relations at Neiman Marcus.

Family patriarch Richard Smith, 80, is Neiman Marcus Group's chairman. His son and son-in-law, Robert Smith, 45, and Brian Knez, 47, are co-vice chairmen.

Based on what Neiman Marcus executives have said about the company's strategy in recent years, it is more likely that Neiman would be a buyer, than a seller. Neiman Marcus chief executive Burton M. Tansky has said that the company is "always looking for opportunities" when he's been asked about the chain's growth prospects.

It isn't likely that Neiman's board would fold the company into a department store chain because rival Saks Fifth Avenue has struggled as part of another company.

In 1998, Saks Fifth Avenue was acquired by Birmingham, Ala.-based Profitts Inc., which took on the more popular corporate name.

Woman's Wear Daily reported that speculation is growing again that it will spin off the New York-based landmark chain, which it considered doing four years ago. The merger of a middle-market department store operator and Saks Fifth Avenue hasn't been considered a good match inside the industry.

E-mail mhalkias@dallasnews.com