NEW YORK — The luxury machine that is Neiman Marcus Group Inc. continues to motor along.
Helped by increased full-price selling and a continuation of stringent inventory management, fiscal first-quarter earnings at Neiman’s rose 14 percent as revenues increased 10.9 percent
In the period ended Oct. 30, the Dallas-based company earned $64.1 million, or $1.30 a diluted share, including a $9.3 million loss on the sale of the company’s Chef’s Catalog net of taxes. Results in the latest quarter compared with a profit of $56.2 million, or $1.16, a year ago.
Excluding the loss from the catalogue sale, profits would have risen 30.6 percent to $73.4 million, or $1.49. On that basis, analysts were expecting earnings of $1.45.
Total revenues rose 10.9 percent to $907.9 million. Comparable-store sales rose 11.4 percent, also excluding results from the catalogue. Neiman’s said this was its fifth consecutive quarter of double-digit comp-store sales gains. Comps at Neiman Marcus stores were up 10.6 percent.
By division, specialty stores, which include Bergdorf Goodman and Neiman Marcus stores, had sales of $737 million, up 10.8 percent from $665 million last year, while sales in the direct marketing unit were $140 million, up 9.4 percent. In the “other” unit, made up of the Kate Spade and Laura Mercier brands, sales were $31 million, an increase of 19.2 percent from a year ago.
President and chief executive officer Burt Tansky said on a post-earnings conference call with investors and analysts that customers continue to respond to luxury and fashion. Sales highlights in all divisions included women’s handbags, contemporary women’s sportswear, denim, women’s shoes, apparel and accessories, such as ponchos and fur-trimmed items. At Neiman Marcus Direct, sales were especially strong in jewelry, accessories and women’s apparel and shoes.
“Our outstanding performance is a result of our long-term strategy of focusing on full-price selling, aggressive management of our expenses and inventory, coupled with strong merchandise and innovative marketing,” Tansky said on the call.
Tansky noted that the company reached a sales-per-square-foot milestone of $541 in the last 12 months, while operating margins reached an all-time record of 13.8 percent, up 200 basis points from the first quarter last year.Inventory was up 6 percent in the quarter, which Tansky attributed in part to the company’s 25 percent increase in distribution center capacity to 600,000 square feet.
Tansky said the company is well positioned for the holidays with the right merchandise assortments and a full calendar of events, including personal appearances by designers in stores. He said the company hopes to “reconnect with customers who will shop with us primarily for that special gift,” as Neiman’s will remain committed to offering differentiated merchandise.
“We chose not to be promotional over the Thanksgiving weekend,” Tansky added, noting that the company hopes to benefit from the extra two days between Thanksgiving and Christmas this year.
The company will be well equipped to handle inventory, as well, during the holidays, Tansky said, thanks to a new program that will put merchandise in a central area, helping to improve inventory turns. The company will thus be better able to “fill holes” quickly, which is expected to add to customer satisfaction.
Already Neiman’s had an 8.4 percent rise in November same-store sales. But Tansky reiterated that the company will mirror strong same-store sales in fiscal 2005 and that comps are anticipated to rise 8 to 10 percent in the second quarter, against a 12.7 percent rise in the year-earlier quarter.
Store expansion plans remain essentially the same for the company, with a few timetables shifted backward. Plans include openings in fall 2005 in Boca Raton, Fla., and San Antonio; Austin, Tex., and Charlotte, N.C., in fall 2006, and Natick, Mass. in spring 2007. The company still expects total square footage to increase 2 to 3 percent over time. The company announced Tuesday that it plans to open a two-level, 120,000-square-foot anchor store in the San Fernando Valley’s Westfield Shoppingtown Topanga in 2008. Neiman’s has four other stores in California.
Several remodels are also under way, including an addition of 50,000 square feet to a store in San Francisco and the addition of 30,000 square feet to a store in Newport Beach, Calif., which is nearly complete.
At Bergdorf Goodman, renovations are on schedule, Tansky said, with the fifth floor set to undergo renovations this year and the fourth floor ready for a spring 2006 start in the contemporary sportswear area.Lastly, the company plans to add two Kate Spade stores in the current second quarter, bringing the total to 22.
“As a company, we continue to focus on producing strong operating results while pursuing our long-term strategy of outstanding customer service, quality merchandise and fashion leadership,” Tansky concluded in a written statement.
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