Burke to exit Bergorf...

[softgrey]

first joan kaner leaves nieman's an now this...
i don't know what to think...
Published: Friday, November 18, 2005

Burke to Exit Bergdorf's
By David Moin

NEW YORK — Robert Burke, Bergdorf Goodman's senior vice president of fashion and public relations, is leaving the store on Jan. 15 to start his own luxury consulting company based here, Robert Burke Associates.
Burke has been Bergdorf's fashion voice for the past six years, and was a key player in several a reas, helping to attract younger customers to Bergdorf's women's and men's stores, repositioning Bergdorf's men's store to become more fashion-driven, selecting fashion for ads and the Bergdorf Goodman Magazine and generating greater press coverage and buzz around the business.
No successor has been named. The parent company, the Neiman Marcus Group, also is searching for a successor to Joan Kaner, who retired last month as senior vice president and fashion director for Neiman Marcus Stores.
In an interview Thursday, Burke said his first client will be Bergdorf Goodman. In the weeks ahead, he plans to announce other clients, both designers and brands. He also expects to work with an investment banking firm to advise it on acquisitions and expansion potential of brands and designers.

"He was a valuable player," said Burt Tansky, president and ceo of the Neiman Marcus Group. "He made a major contribution, helping the team at Bergdorf Goodman to focus on the right fashions, styles and trends. He has had very strong relations with designers and a number of very key vendors."
"Robert's primary focus was helping to position the store from a fashion standpoint, in terms of vendor assortment, fashion in the windows, the advertising, the quarterly Bergdorf Goodman Magazine and on the mannequins," said Gold. "He provided the fashion direction for the store on a macro basis and got very involved in editing the assortments for the quarterly Bergdorf Goodman Magazine. He also played an instrumental role in the product positioning of the men's store.

excerpt from wwd.com

 

[Caffeine]

softgrey, no questions that both were asked out. it always happens when there is an acquisition...the highest paid executives are asked to step down or go sideways...no matter how experienced they are (no, those decision makers don't think about business...they only think about how much salary they will save)

 

[softgrey]

that is your opinion caffeine...
but that is not the truth...

...
not in joan kaner's case for sure...she's been unhappy with the industry for some time...

and i doubt in this case either...
he was actually being considered for joan kaner's position if you remember...
...
he is a major player in the retail industry, as is joan kaner...
and they can pretty much write their own tickets...
there are very few people who will be able to do what they do...
which is obviously why bergdorf will continue to hire burke as a consultant...


burke is guaranteed to make more money as a consultant...
without a doubt...
consultants are VERY well paid if they have his kind of proven track record...
it's a shrewd move, imo...

but i wonder who will be able to fill his shoes...
...

 

[softgrey]

it always happens when there is an acquisition...

what acquisition are you referring to here?...

 

[Caffeine]

what acquisition are you referring to here?...

aren't neiman and bergdorf going to be sold? their private equity partners will make a profit out of it. now they need to improve the bottom line to sell a good price
my company just went through the process. my boss was let go. I saw so many high level executives start their own "consulting" firms. the truth is that they make too much for companies to hire yet they need to have jobs and the industries do need them. it's just my business experience.

 

[Caffeine]

that is your opinion caffeine...
but that is not the truth...

...
not in joan kaner's case for sure...she's been unhappy with the industry for some time...

and i doubt in this case either...
he was actually being considered for joan kaner's position if you remember...
...
he is a major player in the retail industry, as is joan kaner...
and they can pretty much write their own tickets...
there are very few people who will be able to do what they do...
which is obviously why bergdorf will continue to hire burke as a consultant...


burke is guaranteed to make more money as a consultant...
without a doubt...
consultants are VERY well paid if they have his kind of proven track record...
it's a shrewd move, imo...

but i wonder who will be able to fill his shoes...
...

yes. that is because bergdorf will not pay for the huge paycheck my dear. the true cost of such an employee is times of the salary (think about the benefits, 401k match,pension, etc.) let's say such an executive makes $400k/yr, then the true cost is in millions. it has an impact on company's net income. by asking the executive out to be a consultant, the company no longer pays for the salary etc. and saved a lot of money. On the other side, the consulting company itself will have to take on the burden of the pensions and insurance. it is very, very expensive.

 

[softgrey]

caffeine..
i am self-employed...
i understand all of that better than anyone......

but they have not eliminated the position altogether...
they are looking to hire someone else as well as use mr burke's consulting services......
so it will actually cost them more money in the long run...
*additionally....mr burke already has some major clients lined up...
so he will not exactly be struggling from the sounds of it....

same with neiman marcus...they will obviously have to replace joan kaner...and they will need to offer someone a helluva lotta dough to take that position...it will have to be someone with a lot of experience...it's a major job...and there aren't a lot of people who are qualified for that role...

your theory is absolutely sound...
i just don't see how it applies to this scenario...

*but i still do not know that acquisition you are referring to...

 

[spottie]

Actually, Neiman's "took itself" private a couple of months ago (Pincus and a TX equity company "assisted" in the deal). Check business news for details.

 

[faust]

Interesting news. Thanks softie. Hmmm, his own consulting company? Are they hiring?

 

[Caffeine]

Actually, Neiman's "took itself" private a couple of months ago (Pincus and a TX equity company "assisted" in the deal). Check business news for details.

you are right. I was thinking about deal closing time. it was said Nov. 1st but I didn't hear any updates yet.

here is the newskeeping management intact? it's rarely the case)

http://multichannelmerchant.com/news/neiman_marcus_billion/

Neiman Marcus: $5.1 billion baby
May 15, 2005 12:00 PM , By Mark Del Franco

Dallas-based cataloger/retailer The Neiman Marcus Group on May 2 agreed to be acquired by Texas Pacific Group and Warburg Pincus for $100 a share in cash, or $5.1 billion. Texas Pacific and Warburg Pincus will own equal stakes in the company upon the transaction's close, which is expected to be by Nov. 1.
Neiman Marcus, which on March 16 had announced that it retained Goldman Sachs to explore strategic alternatives, operates the Neiman Marcus and Bergdorf Goodman upscale department stores. The company's direct marketing segment includes the print catalog and online operations of Neiman Marcus and equally upscale gifts and home decor title Horchow, along with the Bergdorf Goodman Website.
It's expected that the new owners will keep existing Neiman Marcus management intact and run the business as a stand-alone entity, says Owen Blicksilver, spokesperson for Texas Pacific, which is based in Fort Worth, TX, and San Francisco. Neiman's status as a leading luxury merchant and its tremendous following were attractive to the equity investors, he says, and Neiman's “demographics support future sales growth.”
Neiman Marcus, whose fiscal year ends July 31, reported total company revenue of nearly $3.55 billion for fiscal 2004, up almost 15% from $3.10 billion the previous year. Neiman Marcus Direct sales totaled $571 million, up 16% from $493 million for fiscal 2003. The company also has majority stakes in accessories brand Kate Spade and Gurwitch Products, which manufactures Laura Mercier cosmetics.
Craig Battle, managing director of Princeton, NJ-based investment bank Tucker Alexander, says the transaction “speaks to the consolidation of the major retailers. The private equity guys love Neiman Marcus because it's a high-end brand with cache.” The deal itself “is more evidence that investing is back in the retail and direct-to-consumer marketplace,” he adds.
“It's no surprise that the private equity players are going after the larger public companies,” says Mal Appelbaum, president of New York-based financial consultancy Appletree Advisors. “In the move to raise larger and larger investment funds, the private equity players have to do larger deals. It's a continuation of an overall market trend.”
Appelbaum also expects to see more of these “club deals” in which two or more private equity players team up to acquire a business. Another recent example: last month's acquisition of Nashua, NH-based cataloger/retailer Brookstone by a trio of private equity firms.
Texas Pacific Group manages more than $15 billion in assets across a range of industries. In addition to New York-based apparel cataloger/retailer J. Crew, its investments include Petco, Debenhams, Burger King, Ducati, and Continental Airlines.
Warburg Pincus has approximately $13 billion under management; the investment firm has holdings in such industries as information and communication technologies, financial services, healthcare, media and business services, energy, and real estate.

TPG is very active recently. Apparently their investment in Jcrew is not bad and their business strategy is quite aggressive.

 

[Caffeine]

Interesting news. Thanks softie. Hmmm, his own consulting company? Are they hiring?

honey, he was just let go......there is not going to be a major hiring in a single person consulting company at this point. at least wait for a couple of months...or maybe he will find another job to work for a corporate.

 

[haoshcn]

Interesting news. Thanks softie. Hmmm, his own consulting company? Are they hiring?

Do you want to work for him? I would love too if he is willing to hire a molecular biologist fashionista!

 

[Meg]

I think Faust was being a bit facetious....

 

[fashionista-ta]

Very interesting ... I didn't realize Joan had retired. Last I saw of her she was being quoted about the confusion in fashion for spring ... Wonder why this news wasn't mentioned in any of Neiman's publications?

I have noticed that women seem to find it easier to leave than men do. Look at Rose Marie Bravo, Kristi Todd Whitman, Karen Hughes, etc. Women tend to understand there's more to life than work.

Looks to me like neither of these two had much confidence in what might happen with the company up on the block and decided to be proactive ...

When you have two of the most respected voices in retail working for you, you don't diss them--I think the Neiman-Marcus Group is far too smart for that. I think this was strictly free will.

 

[Caffeine]

Very interesting ... I didn't realize Joan had retired. Last I saw of her she was being quoted about the confusion in fashion for spring ... Wonder why this news wasn't mentioned in any of Neiman's publications?

I have noticed that women seem to find it easier to leave than men do. Look at Rose Marie Bravo, Kristi Todd Whitman, Karen Hughes, etc. Women tend to understand there's more to life than work.

Looks to me like neither of these two had much confidence in what might happen with the company up on the block and decided to be proactive ...

When you have two of the most respected voices in retail working for you, you don't diss them--I think the Neiman-Marcus Group is far too smart for that. I think this was strictly free will.

Sometimes I feel very sad about those things. I am seeing my own beloved boss leave...her voice in our industry is extremely strong...but you know what? EVERYBODY IS REPLACEABLE in business. we are not in retail, but it is the same corporate reorganization sh*t. You work your way up and you are so respected in the industry. Eventually this is what you get. btw, my boss also said publicly that it was her own decision. I don't even think that she believed it
My boss told me that there are many "consultanting firms" around in our industry because of the massive lay offs a couple of years ago. Many respected high level executives were let go, and the best way (or the only way to keep the career going) is to start their own consulting business. But it is not easy and you will lose lots of nice perks that you get in a big corp.
I am not going to argue more here. I just want to give you a littel perspective on the corporate side and business side. Being working on corporate finance for years, I've luckily got opportunities to see how those people decisions are made. p.s. I just survived from a wave of reorganization and my best wishes to my boss and to whoever not survived from the reorganizations. Life goes on.

 

[fashionista-ta]

Well, I don't think any of us have insider knowledge on what happened. What does seem clear is that the company is left with a bit of a black eye, with both of its major voices departed. I'm not familiar with the structure of the company, but I'm certain they have many more executives who don't have a public face, and those would be the logical necks to put on the chopping block. I have been through a Fortune 10 merger myself, and it's a Darwinian process for sure. And btw, a major executive who had "won" his slot left for a better job during the process.

It seems entirely likely to me that these two knew that changes would be coming, and preferred to author those changes themselves. OTOH, it may be that restrictions were being imposed that neither could live with.

Bottom line, I think the company is left weaker. It will be interesting to see their next move.

 

[softgrey]

Very interesting ... I didn't realize Joan had retired. Last I saw of her she was being quoted about the confusion in fashion for spring ... Wonder why this news wasn't mentioned in any of Neiman's publications?

I have noticed that women seem to find it easier to leave than men do. Look at Rose Marie Bravo, Kristi Todd Whitman, Karen Hughes, etc. Women tend to understand there's more to life than work.

Looks to me like neither of these two had much confidence in what might happen with the company up on the block and decided to be proactive ...

When you have two of the most respected voices in retail working for you, you don't diss them--I think the Neiman-Marcus Group is far too smart for that. I think this was strictly free will.

agreed...


it's pretty shrewd timing for robert burke...
many retailer's are looking to hire consultants to help them get back on track right now...
i know this from personal experience...

you can always go back under the corporate umbrella later on it you want...
but consulting is a good way to make some money FAST...

 

[Caffeine]

regarding the neiman marcus situation...I came across an article on WSj. it's about the difficulties for the new owners to raise capital. I thought that it was a nice article telling us the business side of the story.
for your entertainment purpose~

Neiman Marcus Meets Skepticism
Long-Awaited Deal Sees
Some Resistance as Market
For Risky Debt Gets Jittery
By SIMONA COVEL and TOM SULLIVAN
DOW JONES NEWSWIRES
September 29, 2005; Page C4


High fashion met high yield yesterday as the long-awaited leveraged buyout financing for Neiman Marcus Group Inc., once thought to be a shoo-in for the hungry junk-bond market, instead met with some skepticism, as the new market for risky debt turned jittery in recent sessions.

In the face of investors' skittishness, bankers on the $5 billion-plus buyout -- Credit Suisse First Boston is the lead underwriter for the debt portion, with Goldman Sachs, Deutsche Bank and Banc of America Securities -- sharply scaled back the amount of junk bonds to $1.2 billion from $2.175 billion. The more receptive leveraged-loan market, where demand continues to outstrip supply, made up the difference: a term loan that was slated at $1 billion swelled to nearly $2 billion.

The deal included $500 million of 10-year senior subordinated notes, down from an originally planned $575 million, which were sold at par with a coupon of 10.375%. These notes are rated B3 by Moody's Investors Service, single-B-minus by Standard & Poor's and triple-C by Fitch Ratings. It also included $700 million, reduced from $750 million, of 10-year senior unsecured notes to be paid with coupons either in cash or pay-in-kind debt at the company's option. These notes were priced at par with a coupon of 9%. They are rated B2, single-B-minus and triple-C-plus by Moody's, S&P and Fitch, respectively.
A planned $850 million chunk of senior secured notes was restructured and added to the company's 7.5-year term loan, which swelled to $1.975 billion and will yield 2.5 percentage points over the London interbank offered rate. The deal also includes a $600 million revolving credit line.

"It's a nice name but the new issue market is a little uncertain," said Kathleen Gaffney, vice president and portfolio manager at Loomis Sayles in Boston, which manages more than $68.4 billion in equity and fixed-income assets. High leverage on a retailer is a concern, she said, adding that Loomis Sayles is passing on the deal.

Investors, inundated with a steady stream of new issuance and shaken by the recent hurricanes and continuing trouble in the auto sector, question the luxury retailer's prospects as the deal's sponsors pile on billions in new debt. On top of those factors, a retailer may not seem like such a wise buy as consumer confidence -- and maybe the overall economy -- suddenly appear to quiver. Still, market participants are enticed by the company's strong sales and management, which leads to a tough buying decision.
A company official declined to comment on the private offering.

When the buyout of Neiman Marcus, based in Dallas, was announced several months ago, investors predicted it would sail through -- it is a big, liquid deal and investors and analysts alike praise the company's solid management and continually strong operating performance.

But retailers are notorious for inconsistent cash flows and are vulnerable to consumer whims. And unlike some retailers, Neiman Marcus doesn't own the majority of its stores, so they can't be used to protect the deal.

Add to those nagging concerns a high-yield market that suddenly balked in general, and the deal hit a road bump. Neiman Marcus isn't alone: Several recent deals have been forced to r*tchet up coupons.

"People thought there was plenty of extra cash to absorb these new deals," said Michael Difley, portfolio manager at American Century Investments, Mountain View, Calif., which has $17 billion in fixed-income assets under management. "The enthusiasm hasn't really materialized."

It seems to me that the two PE firms met some difficulties on the deal. It was also surprising to me that Neiman doesn't own most of their stores

 

[fashionista-ta]

Most interesting about the stores ... anyone know who does own the majority then??

 

[Caffeine]

my guess is that they don't own the properties, so they have nothing to collateralize. Normally those properties are owned by shopping center developers or real estate investors even REITs. In that case Neiman needs to pay them rent on an ongoing basis...it's basically a lot of debt already.
I wonder if Saks owns its properties...