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Neiman Marcus Profits Jump 24.1% in Quarter

NEW YORK — A focus on full-price selling boosted Neiman Marcus Group’s first-quarter profits.<br><br>The company said Thursday that for the three months ended Nov. 2, its earnings rose 24.1 percent to $28.5 million, or 59 cents a diluted...

NEW YORK — A focus on full-price selling boosted Neiman Marcus Group’s first-quarter profits.

The company said Thursday that for the three months ended Nov. 2, its earnings rose 24.1 percent to $28.5 million, or 59 cents a diluted share, from $23 million, or 48 cents, in the year-ago quarter. Excluding a change in accounting principle, first-quarter earnings were $43 million, or 90 cents.

Results also reflect the reclassification of certain online operations during the fourth quarter of last year. Previously split between Neiman Marcus Direct, its direct marketing unit, and NMG’s “other” category, all are now incorporated in direct marketing.

Revenues in the quarter were up 7.8 percent to $734.1 million from $681.1 million. Total sales at the specialty stores segment — Neiman Marcus stores and Bergdorf Goodman —rose 7.1 percent to $601 million from $561 million in the previous year, with sales rising 6.5 percent at Neiman’s and 12 percent at Bergdorf’s. Same-store sales were up 3.8 percent in the quarter. The company did not provide comps for Bergdorf.

At Neiman Marcus Direct, revenues rose 11.8 percent to $114 million from $102 million. The company’s other business segment, which includes the operations of the Kate Spade and Laura Mercier brands, saw revenues inch up to $19 million from $18 million.

Burton Tansky, president and chief executive officer, said in a statement that the company increased its gross margins for the period as a result of “full-price selling, managing our inventory with a disciplined approach and decreasing our promotional activities.”

Tansky said that while the company was confident of its business strategy, the economic environment remained uncertain.

“Given the current retail climate and our plan to be less promotional compared to last year, we currently anticipate the increase in comparable-store revenues for the second quarter to be 0 percent to 2 percent. Based on our continued focus on full-price selling and our current favorable inventory position, we believe we should experience an improvement in our second-quarter gross margin percentage compared to last year,” he said.

The ceo told Wall Street analysts during a conference call: “For the past year, our strategy has been to focus on profitability and productivity.”

He told analysts that the company will continue to examine all aspects of its business.

“We believe that our customers continue to have a realistic view of the ebb and flow of the market and the economy. We sense that they have made their adjustments, both financially and psychologically,” he said.

Tansky said that top sellers in the quarter in its specialty retail stores were women’s handbags from the European designer collections, women’s short boots, and cashmere shawls and wraps. Cosmetic sales were driven by luxury skin care products, he said.

Executives said that its New York area stores currently are enjoying the strongest sales trends. While customers in some cases may have bought less, they were not trading down, the executives observed.

Of concern, however, were sales at Kate Spade, which Tansky called “disappointing.” The ceo said that although Kate Spade’s core offerings experienced some challenges, he saw “opportunity for resurgence and renewed sales growth.” Even though sales were soft, the brand is still top notch, with customers responding to the brand’s extension into sunglasses, fragrance and shoes, he said.

In contrast, sales at Laura Mercier continued to perform well, with the brand attracting a loyal following in the U.S. and around the world, Tansky said.

He noted that the shortened holiday sales season could “create a sense of urgency with our customers. Regardless of whether we have five weeks or four, Christmas will come.”