The outlook for the high-end consumer might have dimmed some, but luxe retailers have found their guiding light in the Web.
Saks Inc. and Neiman Marcus Inc. weighed in with quarterly results Tuesday. And although their bottom lines varied — with Hurricane Sandy helping pull down Saks’ net profits, and a charge for debt extinguishment erasing most of Neiman’s earnings increase — both companies used the opportunity to hammer home the importance of the Web and how it’s transforming their businesses.
E-commerce is expected to be a vital source of growth for luxe companies this year, when affluent consumers might find themselves on shakier ground.
Stephen I. Sadove, chairman and chief executive officer of Saks, estimated that the company’s core customers have seen their tax rates rise by 8 to 10 percentage points with higher capital gains taxes, an increase in the payroll tax and other adjustments.
“In aggregate, it’s a substantial increase to that consumer,” Sadove told WWD.
That higher tax rate is being offset in part by a strong stock market, which is still near its all-time high, but the good vibes have not been enough to lift luxe shoppers.
“There’s a little bit of a malaise that the higher income consumer is feeling,” Sadove said.
Although retailers continue to draw from their traditional bags of tricks — having sharp fashions, hot brands and good service — many see the integration of online operations with stores as the key to engaging consumers now and for the future.
Sadove said the Internet was gaining a “critical mass” and that marketing money put into digital promotion resonated both online and in stores. Saks is also fulfilling some of its online orders directly from stores, an initiative that will be expanded.
By going online, retailers gain not only new customers, but new customer expectations and competitors.
“On the Web you have to look at what somebody like Amazon is doing,” Sadove said. “Not because they’re selling the high-end apparel, but because of the consumer experience [online shoppers are] looking for.”
Amazon.com, for instance, has one-click buying and a vast array of customer reviews.
“Those have now become the expectations of the consumer, so you’ve got to continue to invest,” Sadove said.
Saks’ fourth-quarter net income fell 44.7 percent to $20.4 million, or 13 cents a diluted share, from $37 million, or 21 cents, a year earlier. Excluding special items in both periods, earnings were flat at 17 cents a share — 2 cents higher than the 15 cents analysts projected. Revenues for the 14 weeks ended Feb. 2 rose 5.6 percent to $976.6 million from $925.1 million. The most recent quarter was one week longer than the year-ago period and helped make results look better. Comp sales, which strip away that extra week, increased 0.7 percent for the quarter.
Neiman’s has also zeroed in on digital initiatives — from investing in Web sites overseas to arming its associates with smartphones to help them communicate with customers.
“We remain very focused in providing our customers the greatest level of flexibility to shop with us regardless of where she is and what device she is using,” said James Skinner, executive vice president, chief operating officer and chief financial officer, on a conference call with debt investors.
Skinner said the company wants to grow its e-commerce business not just by having a strong assortment of luxury goods, but also by being “a site that is easy to navigate” as well as having “sophisticated customer analytics and the latest in digital marketing.”
Neiman’s recently launched, neimanmarcus.com.cn, a full-price e-commerce site for the Chinese market that operates like the U.S. flagship site. The company also invested an additional $10 million in Glamour Sales Holdings, a Chinese e-commerce firm Neiman’s already pumped $28 million into last year. The retailer now owns a 44 percent stake in Glamour.
Net profits for Neiman’s, which just finished its second fiscal quarter, were up modestly to $40.4 million from $40.1 million a year earlier. Excluding a loss on the extinguishment of debt, the company’s earnings jumped 24.2 percent in the quarter to $49.8 million.
Neiman’s revenues for the three months ended Jan. 26 gained 6.5 percent to $1.36 billion from $1.28 billion on a comparable-store sales increase of 5.3 percent. But the company’s online sales grew 17.9 percent to $314.7 million and accounted for 23.1 percent of total revenues for the quarter.
@margotrobbie steps out onto the red carpet wearing @miumiu. The actress is nominated for “Outstanding Performance by a Female Actor in a Leading Role” in “I, Tonya” at the #SagAwards. (📷: Stewart Cook) #wwdfashion
For @massimogiorgetti of @msgm, the Nineties are his favorite decade. “They had a huge impact on my personal growth. What I like of the Nineties is that they are not so precise in terms of style as other decades…there was actually a bit of everything,” he said. As seen on MSGM’s Spring 2018 show: tie-dye and a bit of grunge, two styles that are synonymous with the decade #wwdfashion #wwddecades (📷: @kukukuba)
Breaking News: @hedislimane joins @celine as its new artistic, creative and image director. One of fashion’s preeminent image-makers and trendsetters, Slimane is to join the LVMH brand on Feb. 1 and unveil his first fashion proposition for men and women next September during Paris Fashion Week. It marks a major homecoming for Slimane, who cemented his reputation – and influenced men’s tailoring for more than a decade – as the designer of Dior Homme between 2000 and 2007. He went on to reinvent and ignite the house of Yves Saint Laurent, which he rechristened Saint Laurent, between 2012 and 2016 – all the while maintaining a close relationship with the Arnault family, which controls LVMH and Dior. Read the full exclusive story on WWD.com. Link in bio. #wwdnews #wwdfashion
“Personally I believe the Eighties have been the richest and more vivacious period for international fashion,” Giorgio Armani said when asked what his favorite decade of fashion is. It was a moment of disruption and experimentation and only thinking back to the first years of that decade is always an emotion for me, for what they have meant to me and my work.” The influence is clear in @giorgioarmani spring 2018 collection, pictured here, which was full of bright colors and unexpected prints. Read more about which decades designers loved most on WWD.com #wwdfashion #wwddecades (📷: @aitorrosasphoto)
For Lady Gaga’s only Italian show on her “Joanne World Tour,” the singer wore a range of @versace_official outfits. The standout piece: this custom-made bodysuit inspired by the brand’s spring 2018 collection. #wwdfashion (RG: @ladygaga)
@_camillaruth_ is expanding on the wellness-craze concept with @westbourne – a new NYC restaurant that’s both a healthy-minded café as well as a business that gives back to the community. Marcus works with the Robin Hood foundation to give back to The Door, a non-profit providing youth development services, and also hires employees through The Door. Read our full interview with Marcus on giving back through food on WWD.com. #wwdeye (📷: @lexieblacklock)