Moody’s stabilizes Neiman Marcus view

Moody's Investors Service said it changed its outlook for NMG Holding Co., Inc. (Neiman Marcus) to stable from positive and affirmed the company's ratings including its B3 corporate family rating, its B3-PD probability of default rating and the Caa1 rating on its senior secured notes.

"The change in outlook to stable reflects Neiman Marcus' underperformance in 2023 with profitability below our expectations as aspirational customers pulled back and promotional cadence was higher due to excess inventory resulting in weaker than anticipated credit metrics," said Mickey Chadha, a Moody's vice president, in a press release.

"We expect credit metrics and profitability to improve as inventory levels come down and promotional activity normalizes resulting in improved gross margins in fiscal 2024. The company has also invested in optimizing and streamlining its distribution and plans to cut operating costs. The combination of lower markdowns with distribution efficiencies and reduced operating costs is expected to drive EBITDA growth and improve lease-adjusted debt/EBITDA to around 4.5 times in the next 12 months," Chadha added.

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