Neiman Marcus Q1 Sales Up 6.7%, Core Customers Return but are Cautious

Luxury retailer Neiman Marcus, Inc. said Wednesday that revenues increased 6.7 percent to $927.2 million for the first quarter of fiscal year 2011. Comparable revenues increased 6.4 percent and operating earnings were $99.8 million compared to $74.8 for the same period of the prior year. Sales were driven by an increase in customer demand and higher levels of full-price sales, something the company has been the focusing on during the past year.

Specialty retail stores sales increased 5.5 percent to $761.1 million with comparable sales up 5.1 percent for the quarter. Operating earnings increased 22 percent to $108 million. The company’s direct business sales (Internet and catalog) increased 12.8 percent to $166.1 million—led by a 16.9 percent increase in Internet sales to $139 million, offsetting a 4.6 percent decline in catalog revenue.

Prior to the recession, Neiman Marcus defined its core customer as spending $12,000 per year at its store. Karen Katz, Neiman Marcus new CEO, said that customer has returned but is spending more thoughtfully and is looking for value.

“I would generally say the core customer is actually shopping,” Katz said. “(But) she is being much more deliberate in how she’s shopping so her spending is not back up to the levels of pre-recession and we don’t have an expectation that it will get back to that level. As a result the way we are thinking about our strategy is that we need to attract other affluent customers into the Neiman Marcus group.”

Katz noted the most affluent customers are again purchasing the highest priced items but other consumers are slow to return to buying more affordable luxury items. This caused the company to make some changes to pricing strategy.

“Generally speaking, things at the high end are doing very well,” Katz said. “We went through what we call the rebalancing of profit in terms of price point. We needed to fill in better in the middle and the opening price points of what we offer and those where we’ve done that we actually had nice success with it. Our handbags division for an example, everything had grown to the high end in handbags and we came back and balanced out the prices there with existing vendors and it’s worked extremely well. And we think that that is helping fuel the success of our handbag business right now.”

Neiman Marcus Internet Sales Up 12.8 percent, New CEO looks to Reach Customers through Mobile Devices

Karen Katz photo by Jeanne Prejean

Neiman Marcus’ direct business sales (Internet and catalog) increased 12.8 percent year-over-year to $166.1 million in the first quarter of the 2011 fiscal year—led by a 16.9 percent increase in Internet sales to $139 million, offsetting a 4.6 percent decline in catalog revenue. Karen Katz, the new CEO, said the company will continue to invest in Internet and social media initiatives.

“At the heart of our strategy is an idea that a customer should be able to shop a Neiman Marcus group brand anytime, anywhere and anyplace she chooses,” Katz said during an earnings conference call Wednesday.

The luxury retailer’s e-commerce business includes Web sites for its Neiman Marcus brand, its Last Call clearance brand and Horchow, its catalog and Internet business that offers home furnishings, linens, decorative accessories and tabletop items.

Now Katz, who replaced Burt Tansky as CEO in October, said she is trying to reach customers through their mobile devices.

The company recently introduced a Neiman Marcus gift app for iPhone and iPad, a The Shoe Salon Bergdorf Goodman iPhone app (pictured left) with an emphasis on affordable gifts, a gift of the day and gift suggestions at different price points, Katz said. There’s an interactive iPad app for all Neiman Marcus catalogs in which users can shop right from the catalog.

“There’s clearly a need as the customer is getting more connected between their mobile devices, their iPads and those kinds of things we really have to ramp up how we’re connecting with the customer in that way,” she said. “Obviously we have a large e-commerce business and we are going to continue to fuel that but even in our stores we’re studying how to be better connected with our customers."

Sales at Neiman Marcus and BG Stores Up 6.4% in November

In another sign of a good holiday season for the U.S. luxury market, Neiman Marcus Inc. reported that comparable revenues in its Neiman Marcus and Bergdorf Goodman stores increased 6.4 percent in November. Jewelry and designer handbags were among the strongest categories.

Total sales for all Neiman Marcus Inc. operations in November increased 5.8 percent to $322 million. The company said revenue growth trends were the strongest in the company’s stores in the Southeast, New York City and Texas. Comparable sales for the month increased 5.5 percent to $321 million.

Comparable revenues at Neiman Marcus Direct, which include online and print catalog operations under the Neiman Marcus, Horchow and Bergdorf Goodman brands, in the four-week November period increased 2 percent. The top selling merchandise categories in the Direct Marketing segment included women’s fine apparel and shoes, accessories and men’s.

Strong Showing for Retail Stores in September

A number of department stores posted strong gains for the month of September, outperforming other retails segments.

For example, Neiman Marcus reported that its same store sales rose 4.7 percent during the month against the same period last year. Jewelry, women’s shoes, handbags and men’s clothing saw big sales gains. Stores in California, Texas, the south-east and New York were the top performing for the period.

Saks reported a 6.5 per cent increase in same store sales, highlighting strength in a similarly broad range of categories. Nordstrom said its same store sales rose 7.5 percent and that transactions at its main stores had increased for the 13th month in a row.

Mid-market retailers also did well for the month. Macy’s same store sale rose 4.8 percent, JC Penney was up 5.1 percent and Kohl’s increased 3 percent in September.

Teen and youth retailers also delivered a generally strong month, with same store sales at Abercrombie & Fitch up 13 percent.

Neiman Marcus Q3 Sales Up 10%, Net Earnings Up 150%

Neiman Marcus reported a year-over-year increase in revenues of 9.9 percent to $983.8 million for its fiscal third quarter. Comparable revenues increased 9.7 percent. Operating earnings for the period ended April 30 increased 45 percent year-over-year to $123.2 million.

The Dallas-based luxury retailer said Friday that net earnings totaled $46.2 million for the 13-week period compared to $18.5 million in the prior year, a staggering 149.7 percent increase. EBITDA increased 23 percent to $169.9 million for the period.

For the 39 weeks ended April 30, the company reported total revenues of $3.08 billion compared to $2.87 billion in the prior year. Comparable revenues increased 7.3 percent. The Company recorded operating earnings for the 39 weeks ended April 30, 2011 of $312.3 million compared to $227.3 million for the comparable period a year ago, an increase of 37 percent.

The company’s year-over-year net earnings rose 200.9 percent to $93 million for the 39-week fiscal period, ended April 30. EBITDA increased 18 percent for the period to $457.2 million.

Luxury Brands Report Strong Sales in March

Luxury retail sales continue to be the bright spot in an otherwise fragile U.S. retail sector that is balancing on a number of internal and external factors.

In March, luxury department stores reported sales increases for stores open more than a year. Among them are Saks Fifth Avenue (up 11.1 percent) Neiman Marcus (up 8.8 percent) and Nordstrom (up 5.1 percent). Victoria’s Secret, the high-end lingerie store owned by Limited Brands reported a 19 percent increase in same store sales.

Meanwhile, Limited-owned GAP, a mid-market brand, reported a same store sales drop of 9 percent. Other mid-market and low-end stores were disappointing, as well, including Target (down 5.5 percent), Dilliards (down 1 percent) and Kohl’s (down 6.5 percent).

The International Council of Shopping Centers said comparable sales at chain stores increased 2 percent in March, year-over-year. The retail organization said a late Easter impacted year-over-year sales data.

“Sales for the month of March were on the high side of our expectations despite the negative impact of the Easter-date shift and less than favorable weather conditions in parts of the country,” said Michael P. Niemira, chief economist and director of research for ICSC. “This gain, in the face of somewhat adverse factors, was encouraging and reflected a solid underlying trend in consumer demand.”

Bergdorf Goodman Earns Top Ranking Among Luxury Consumers

For the second consecutive year, Neiman Marcus' Bergdorf Goodman subsidiary earns the top ranking among eight luxury retailers in the 2011 Luxury Consumer Experience Index survey of wealthy shoppers conducted by the Luxury Institute. Respondents rated retailers on store personnel, the shopping environment and whether the overall experience resulted in complete satisfaction.

Brooks Brothers earns the second highest overall LCEI score but ranks first for completely meeting wealthy customers' needs. Nordstrom receives the third highest LCEI score, and remains the most popular luxury shopping destination, visited by 38 percent of wealthy shoppers in the past 12 months. It is also earns the highest loyalty, with 98 percent of shoppers planning to come back.

“The top-tier brands of luxury with resources are now focused on becoming customer-centric global enterprises,” says Milton Pedraza, CEO of the Luxury Institute, a New York-based market research firm specializing on high net-worth consumers, which does the LCEI survey. “The only way to achieve this is to create establish a self-reinforcing culture of service to your associates and your customers. The work is extremely hard but the financial returns can be dramatic.”

Survey participants had minimum household income of $150,000, with average income of $271,000 and average net worth of $2.4 million.