Neiman Marcus Group has more than just longevity to celebrate.
America's leading luxury chain throws its 100th birthday bash in its hometown of Dallas next month, but on Wednesday crowed about healthy increases in operating earnings and sales in the fourth quarter and year ended July 28. Its affluent customers remain loyal despite the uncertainties in the housing and stock markets, as well as rising competition from the likes of Nordstrom, Bloomingdale's, Barneys New York and Saks Fifth Avenue.
Neiman's was acquired by TPG Capital and Warburg Pincus in October 2005 for $5.1 billion and is aggressively paying down the debt and still incurring costs from the deal, which has impacted the bottom line. As a result, the retailer reported a net loss of $15.9 million in the quarter, down from $42 million in the year ago period, while for the fiscal year the net earnings increased to $112 million, from $56.6 million. The company posted nearly $62 million in interest costs for the last quarter and $260 million for the fiscal year.
Operating earnings rose 51.9 percent to $32.2 million in the fourth quarter, against $21.2 million in the year-ago period, and on an adjusted basis rose 45.5 percent to $55 million from $37.8 million. For the year, they increased 44.9 percent to reach $476.8 million against $329 million in the year-ago period, or $550.4 million on an adjusted basis against $446.5 million.
While deleveraging, Neiman's continues to be propelled by nimble inventory management and strong sales — up 7 percent on a comparable-store basis in the quarter — with recent strength in handbags, precious jewelry, men's shoes, men's clothing, dresses, eveningwear and couture. Total fourth-quarter sales rose 9.5 percent to $981.7 million from $897.1 million. For the year, sales rose to $4.4 billion from $4 billion.
"After 100 years, we are a testament that service and quality never go out of style," Neiman Marcus Group Inc. chairman, president and chief executive officer Burt Tansky said during a conference call Wednesday. "It was another outstanding year for our company."
The group hit two milestones in its fiscal year: Neiman Marcus stores surpassed $3 billion in sales and Bergdorf Goodman eclipsed $500 million. Also, the direct business surpassed $700 million.Neiman's continues to lead its competitors in productivity, achieving $638 in sales a square foot in fiscal 2007, up 4.5 percent from $611 the year before.
For the first time, Tansky discussed the future of Cusp, its new specialty offshoot specializing in women's contemporary merchandise. The ceo said a decision on whether to roll out the chain, or shut it down, will be made in January, following a review. "We are not going to open additional units but rather evaluate what works and what doesn't from every aspect — size of store, merchandise assortment, fixturing and so forth," said Tansky.
"We are pleased with the performance of this concept and believe we are reaching a new customer," he continued. "However, we will take a slow and steady approach. We don't plan on opening any additional stores until we complete our review."
Tansky did note that, as other retailers are experiencing, there's been some slowdown in Neiman's business in California, and in home goods along with the rest of retailing, though home represents a small percentage of Neiman's overall volume.
Asked if the California issue is related to initiatives by the competition, notably flagship openings by Bloomingdale's and Barneys in downtown San Francisco, Tansky replied; "No. In my opinion, it's a temporary phase. We will break out of that pretty quickly," though he said he couldn't pinpoint the cause. "Our stores are well positioned and well stocked."
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