Friday, June 25

Mytheresa IPO Is Less Fashion-Forward Than It Looks

Online luxury-fashion retailer Mytheresa, which used to be owned by struggling department store Neiman Marcus, has fetched a high price at its market debut. Although the business seems to tick all the right boxes for investors, not all trends are in its favor.

This week, around one-fifth of Mytheresa’s parent company, MYT Netherlands , was sold to investors at a $2.2 billion valuation. Appetite for fashion e-commerce businesses is strong among investors. One week after its initial public offering, Poshmark ’s shares are trading about 66% above where they initially priced. Thursday morning, MyTheresa shares started trading at $35.85, and were recently up 29% on the New York Stock Exchange.

It is a great result for Mytheresa’s owners, private-equity firm Ares Management and the Canada Pension Plan Investment Board, after a messy legal spat and Neiman Marcus’s bankruptcy. The department store’s bondholders sued the duo for changing Mytheresa’s place in the failing retailer’s corporate structure in a way that put it out of reach of creditors.

Proceeds from the sale will ultimately be used to settle debt the parent company owes as part of the bankruptcy settlement. Although the loans don’t mature until 2025, they carry an expensive 7.5% coupon so it makes sense to retire them early.

Investors have paid through the nose for the business. At the IPO, Mytheresa was valued at four times last year’s sales and over 50 times earnings before interest, taxes, depreciation and amortization. The highest bid its owners received in 2019, when they tried to sell the business, was just $500 million.

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