Mar 10, 2010
Neiman Marcus posts profit as sales start improving
Mar 10, 2010
By Phil Wahba and Martinne Geller
NEW YORK, March 9 (Reuters) - Neiman Marcus Inc [NMRCUS.UL] reported a quarterly profit on Tuesday 9 March as shoppers returned to its upscale department stores over the holidays and the retailer avoided profit-devouring discounts by keeping inventories low.
The privately held chain, which reported a year-earlier loss, also received a lift from its online and catalog Neiman Marcus Direct unit, whose profits more than doubled.
The company said it saw signs of a recovery in spending by tourists in New York City, as well as in the hard-hit markets in Florida and California. It also cited its broader array of lower-priced merchandise brought in to suit the frugality that is now in fashion, even with well-heeled shoppers.
But the operator of the Neiman Marcus and Bergdorf Goodman chains sought to affirm its status as a luxury retailer.
"We are not trading down. We are, however, offering our customers additional options within our assortments," said Chief Executive Burt Tansky on a conference call. He added that the company's progress with "rebalancing" its merchandise assortment will be even more visible to consumers this Spring.
Comparable sales at its Neiman Marcus and Bergdorf Goodman stores open for at least a year, and at its online and catalog unit, rose 0.6 percent in its fiscal second quarter, which ended on January 30.
The two department store chains make up about 80 percent of the company's revenue.
As affluent shoppers began returning over the course of the quarter and the pressure to offer discounts eased, company-wide comparable sales improved.
In November, they fell 7.5 percent, but turned positive in December and January, and appeared to be poised for further improvement; in February they rose 6.2 percent.
Neiman's competitors have also benefited from improving luxury spending as rising stock markets and Wall Street bonuses have begun to restore wealthier households' net worth.
Last week, Saks Inc (SKS.N) reported that comparable sales rose 3.1 percent in February, while Nordstrom Inc (JWN.N), which has won market share from its competitors, said its same-store sales were up 10.3 percent.
FROM DEFENSE TO OFFENSE
Dallas-based Neiman Marcus operates 41 Neiman Marcus Stores across the United States and two Bergdorf Goodman stores in Manhattan. It also has 28 clearance centers called Last Call and six smaller boutiques called Cusp.
Tansky said the company was working with some of its existing vendors to develop new merchandise specifically for Last Call in an effort to appeal to shoppers who might not normally shop at Neiman Marcus stores. He also said the company was exploring the development of some private label merchandise.
The company also just opened Cusp departments within Neiman Marcus stores in Atlanta, San Francisco and Dallas to test how the concept would fare within a larger store, Tansky said.
"Over the past few months we have begun to shift from a purely defensive mode in reaction to the economy to a more offensive stance in which we are exploring opportunities within our current business model," Tansky said.
The company forecast net capital expenditures of $55 million to $65 million.
Neiman's overall revenue in the quarter rose 2.1 percent to $1.1 billion. The company reported a net profit of $4 million, compared with a loss of $509.3 million a year earlier.
Neiman Marcus earned $67.1 million on an adjusted operating basis, compared with a loss of $32.6 million a year ago, excluding an impairment charge in the year-ago quarter.
Neiman Marcus reported merchandise inventories were 12.9 percent lower in the quarter compared with a year earlier.
The retailer was acquired by an investor group led by Texas Pacific Group and Warburg Pincus LLC in October 2005. (Additional reporting by Martinne Geller; Editing by Maureen Bavdek, Steve Orlofsky and Gunna Dickson)
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