Neiman Marcus launches "Digital First" amid net loss
Neiman Marcus said on Tuesday it continued to see sales fall for another straight quarter and is now betting on digital for a turnaround.
For the fiscal year ended July 29, the department store reported total revenue of $4.71 billion compared to $4.95 billion in fiscal 2016, down 5.2 percent. Similarly, in the fourth quarter of fiscal 2017, the Dallas-based luxury retailer reported total revenues of $1.12 billion, a decrease in comparable revenues of 0.5 percent.
For the full year, Neiman’s reported a net loss of $531.8 million compared to a net loss of $406.1 million in the prior year. Net loss was $366.3 million in the fourth quarter, versus a net loss of $407.3 million, recorded during the same period last year.
The quarterly net loss narrowed, compared to previous quarters, where Neiman Marcus saw mid-to-high single-digit drops, while the yearly loss widened, it said.
Still, the retailer believes the numbers are promising and showed stronger online sales, greater sales stability at full-line stores and improved inventory alignment during the year.
In fact, the retailer’s CEO Karen Katz said that all problems with its new inventory system have been resolved. Problems with the system had resulted in a company cost of $55 to $65 million in sales during the 2017 fiscal year.
The upscale retailer was once discussing plans for an initial public offering and said it was even considering selling the company, due to an enormous debt load. But earlier this year, the retailer said it had terminated any talks regarding a partial or full sale of the company.
"While looking ahead, we know challenges remain, but we are encouraged by the strategies we have in place to improve our operational efficiencies and performance," said Katz, on a post-earnings call in June.
This year, the company also implemented a reorganization plan that included cutting 225 employees and taking a hard look at the future of its Last Call outlet division.
In September, Neiman Marcus announced the closing of 10 of its 38 Last Call stores – about 25 percent of its outlet stores – in order to better focus on its highest-end locations.
A number of apparel retailers such as Gap Inc and Victoria's Secret have struggled with changes in consumer tastes and shopping habits, including the rise of online shopping. In the past, Neiman Marcus has cited reduced shopper loyalty and challenges with faster production, as the culprit of declining store sales.
“Our core customer is visiting us a little less frequently and customers in general are a little less loyal to any one retailer,” Katz said in a conference call in December. “They continue to shop for the best deal and the lowest price.”
Now, the luxury chain seems ready to further invest in e-commerce. The company also announced on Tuesday a new digital strategy to help strengthen the brand.
Dubbed “Digital First,” the strategy was shared in the company’s latest SEC filing, though details were scarce. The company said “Digital First” would “further its leadership position in the luxury retail space by anticipating customers’ evolving behaviors and engaging them more deeply to drive traffic online and in stores.”
Considering growing online sales that continue to outperform store business, the move is promising.
Despite an increased interest in online sales, the retailer has also increased tactics to attract and maintain its in-store customer base. Last November, the company opened a Rent the Runway shop-in-shop to get familiar with a new clientele interested in fashion rental services. Neiman Marcus also launched a plus size department at its Last Call stores in February to again further satisfy a different market.
Neiman Marcus currently operates 42 full-line stores in the U.S. The retailer is also building its first New York City flagship location at The Shops at Hudson Yards. The 250,000-square-foot, multi-level store will open in 2018.
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