The owners of Neiman Marcus should beware a Sears-like trap. The upscale retail chain acquired in 2013 by private-equity firm Ares Management and the Canada Pension Plan Investment Board for $6 billion just abandoned talks to sell itself after an earlier busted IPO. The buyout shop's boss remains optimistic. Hedge-fund boss Eddie Lampert has been expressing similar confidence about his decidedly less posh department-store investment for over a decade.

Like many U.S. merchants, Neiman Marcus is struggling. Sales at existing stores tumbled for the seventh consecutive quarter while adjusted EBITDA fell by more than a fifth from a year ago. Ares boss Tony Ressler is a believer in the company's brand and customer loyalty, even if more work is needed to unify its bricks and clicks. "I think based on our recent performance you'd have to acknowledge we haven't done what we know what we have to do," he said in a recent interview with Reuters Breakingviews.

A comparable refrain has been espoused by Lampert about Sears, which he merged with Kmart in 2005. It has been six years since the company reported an annual profit. Its shares have tumbled by 96 percent over the last decade. Once-venerable Sears warned in March it could go bankrupt and Lampert has taken to blaming the media for its troubles. He also proclaimed earlier this year that Sears would "succeed in becoming a new kind of retailer."

There are notable differences, of course. Ares is only in its fourth year of owning Neiman Marcus. The Dallas-based retailer also caters to richer shoppers, owns fewer stores and has established a solid online presence.

A big turnaround nevertheless will be tough, just as it has been for the investor group, including KKR and Bain, that bought Toys R Us a dozen years ago for $6.6 billion. Ares has marked Neiman's $4.9 billion of debt at a discount of about 25 percent. Only the company's most senior loans are recorded at face value.

A fresh injection of cash may be necessary. The bulk of Ares' equity has been wiped out, so to merely break even will take impressive growth and improved profitability at Neiman. Ressler's enthusiasm is admirable, but his firm's limited partners may have a timetable before they prefer that he curb it.

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CONTEXT NEWS

- Neiman Marcus said on June 13 it had ended talks regarding a partial or full sale, a few months after initiating a strategic review. On the same day, the high-end retail chain said total revenue had fallen 4.9 percent to $1.1 billion in the third quarter from a year ago.

- The company, which is owned by private-equity firm Ares and the Canada Pension Plan Investment Board, also recorded a non-cash impairment charge of $154 million, mainly related to writing down its brand.

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(Editing by Jeffrey Goldfarb and Martin Langfield)

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