Why CPPIB and Ares Withdrawing Neiman Marcus from its IPO is a Big Deal

Are large-chain physical retail stores decaying in North America? Are financial investors failing department store retail?

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Direct institutional investors such as the Canada Pension Plan Investment Board (CPPIB) and other private equity firms plugged in mounds of capital into department store companies in North America. Will these significant financial bets pay off? The bad news in retail keeps rolling in. In early January, The Limited, a women’s clothing store chain, is closing all of its 250 stories and laying off 4,000 employees. The Limited is owned by private equity firm Sun Capital Partners, which witnessed falling foot traffic at U.S. shopping malls. Even Macy’s, the largest department-store company in the United States, is shuttering 100 stores in 2017. This will end up removing 10,000 jobs at Macy’s. In addition, Illinois-based Sears Holdings Corporation, which also owns Kmart, is closing 150 stores and even sold its iconic Craftsman tool brand to Stanley Black & Decker to stave off financial ruin. Sears is led by Eddie Lampert, a hedge fund manager, who is trying to keep the company away from financial insolvency. Lampert even provided around US$ 1 billion in financing for Sears to maintain operations. Both Lampert and another hedge fund titan Bill Ackman of Pershing Square have tried their activist hands attempting to turn retail giants into “tech companies”. Ackman exited its Target investment in 2011.

Neiman Marcus Group

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