Neiman Marcus upgraded to B3 by Moody's as operations ride luxury goods strength

NMG Holding Company Inc., doing business as Neiman Marcus, was upgraded today by Moody's to B3, from Caa1, retaining a stable outlook, with the agency citing improving operating performance and better credit metrics. The company's senior secured issue rating was upgraded as well, to Caa1 from Caa2.

Neiman was showing progress in operations as it continues to "seize on the current strength in the luxury segment," Moody's said. However, the agency noted that the luxury apparel market's recovery "remains at risk … as consumers maintain their more casual dressing habits."

The company's liquidity is "very good" with about $395 million in balance sheet cash and $743 million available on an undrawn revolver, according to Moody's. The agency projects "very modest-to-breakeven free cash flow generation" as Neiman invests in working capital and capital expenditures.

Last July, NMG was upgraded by S&P Global Ratings to B- and a positive outlook, from CCC+ and a negative outlook, with the rating agency citing improvement in the company's operating performance. At the time, the company's senior secured issue rating was also raised to B-, from CCC+.

Dallas-based Neiman Marcus is a luxury department store and omnichannel retailer.