Neiman Marcus wanes as poor results trouble investors; distressed space ends mixed as market drifts off

By Stephanie N. Rotondo

Seattle, Sept. 26 – The distressed debt market “felt like maybe some of the upward momentum was taking a little bit of a pause,” a trader said Monday.

He also noted that the market was “a little bit quieter” as the stock markets were in decline.

Neiman Marcus Group Inc. was “one of the more active names,” a trader said, as the high-end retailer reported weak fiscal fourth-quarter and full-year results.

“I guess the market didn’t like them,” another trader said of the numbers. The bonds retreated at least 2 points on the day, though that was better than the day’s lows.

Among the distressed arena’s go-to names, Intelsat SA paper was mixed on the day.

A trader said the 7¼% notes due 2019 dipped “almost a point” to 80 3/8. However, the 7¾% notes due 2021 held steady at 31, while the 7½% notes due 2021 ticked up a quarter-point to 75½.

Meanwhile, Concordia International Corp.’s 7% notes due 2023 were seen unchanged at 62½.

In the energy realm, coal producer Murray Energy Corp. saw its 11¼% notes due 2021 “continue to tick higher,” according to a trader.

The trader said the debt moved up “as high as 50.”

Neiman loses ground

There was “a lot of trading” in Neiman Marcus on Monday, a trader said, as investors responded to the retailer’s disappointing earnings.

The trader said at least $24 million of the 8% notes due 2021 dropped 2 points to 82.

A second trader saw the issue trading in an 80 to 82 range, which compared to levels in the mid-80s last week.

“It seemed like the first trades out of the box were sub-80, so they recovered a little bit,” the trader noted.

For the fourth quarter ended July 30, net loss was $407.2 million, which compared to a loss of $32.9 million the year before. Sales declined 3.3% to $1.13 billion.

The company attributed the much wider loss to higher markdowns amid declining traffic and demand. Neiman also noted that it wrote down its value by $466.2 million during the quarter.

For the fiscal year, net loss was $406.1 million versus a profit of $15 million the previous fiscal year. Sales dropped 2.9% to $4.95 billion.

The weak results renewed talk that the company could be sold again. Ares Management LLC and the Canada Pension Plan Investment Board bought the retailer in 2013 for $6 billion.

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