Neiman Marcus, the luxury U.S. retailer that was purchased equally by Canada Pension Plan Investment Board and Ares Management for US$6 billion in 2013, may be on the block and it appears that Canada’s Hudson Bay Co., is a potential suitor.

The Wall Street Journal reported on Tuesday that HBC is in talks to buy the firm, but that it was not interested in taking on Neiman’s debt.

 That report emerged shortly after Neiman released its financial statements, and they weren’t pretty: Sales for the quarter were lower by 6.1 per cent and, because of a US$153.8 million “non-cash impairment charge,” the company reported a net loss for the quarter of $US153.8 million compared with a small profit ($7.9 million) in the same period last year. (Impairment changes were taken to bring certain assets to their estimated fair value.)

For the six month period, revenue was lower while the loss (US$140.6 million) was larger than the $2.7 million loss recorded in the same period the previous year.

In a release Neiman Marcus acknowledged it is undertaking “a process to explore and evaluate potential strategic alternatives, which may include the sale of the Company or other assets, or other initiatives to optimize its capital structure, as well as a number of other alternatives.”

The Dallas-based luxury retailer, which is carrying US$4.4 billion of long-term debt, indicated that will hire financial advisors to assist with the evaluation. Of the US$4.4 billion in debt, US$2.9 billion is on account of a term loan that is set to mature in 2020. The rest of the debt is on account of two non-investment grade offerings (US$960 million and US$600 million) that mature in 2021. The prices of all three issues were down a tad in trading Tuesday, but rebounded after the report of the potential sale talks.

The bonds are trading in the low US$60 per US$100 face value range.

As with a number of other companies in a similar situation, Neiman Marcus said that it “cannot provide assurance that the exploration of strategic alternatives will result in the completion of any transaction or other alternative, or regarding the possible terms or form of any such transaction or alternative.”

Indeed it’s early days as the company has not set a timetable for the completion of the evaluation process.

In line with the approach adopted by other companies, Neiman Marcus said that it “does not expect to comment further unless and until a specific transaction is approved by its Board of Directors or the Company otherwise decides further disclosure is appropriate or required.”

It made no mention of talks with HBC.

Neiman Marcus noted that it had made changes to its corporate structure that were designed to “enhance its financial flexibility with respect to some of its assets.”

Specifically, certain of its subsidiaries have been designated “as Unrestricted Subsidiaries for purposes of the Cash Pay Notes and PIK Toggle Notes.”

In general PIK (or payment in kind) refers to a situation where debt holders receive interest payments in additional securities rather than in cash.