Luxury retailers are ratcheting up their games, but Neiman Marcus Group Inc. is unfazed by the widening competition.
For the third-quarter ended April 28, Neiman's said Thursday that earnings jumped 47 percent to $59.5 million from $40.5 million in the year-ago period.
Total revenues grew 8 percent to $1.07 billion from $99.3 million, and same-store sales rose 6.1 percent.
"We are very, very pleased with our results for the quarter and our ongoing positive results, and we are reaching new levels of performance that we are proud of," Burt Tansky, president and chief executive officer, told WWD. "We work very hard to get these kind of results, and we have potential to improve further. We are not changing anything. What we do, we do well. We understand the customer, know what she wants and we serve her well."
During a conference call, Tansky cited handbags, designer jewelry, dresses, women's shoes and the men's categories as leading segments for the last quarter.
Neiman's main rivals — Saks Fifth Avenue, Bloomingdale's, Nordstrom and Barneys New York — are expanding with more doors and showing strong results, as well.
"We haven't felt any of the impact of that," Tansky said. "It takes more than buying merchandise to get it sold properly. It has to be accompanied by service, follow-through and developing a relationship with customers. Those are the ingredients our customers expect. It takes a great deal more to be successful at the top range of fashion than just buying goods and putting it out on the floor. You have to be able to sell it profitably."
Asked for his outlook on fall, Tansky said, "We continue to be opportunistic about levels of business as we go forward. We're pleased with our selection of merchandise. Based on an early view of designer offerings, fall could be a good season. Goods are starting to roll in now and [deliveries] peak in August and September."
Operating earnings for the quarter were $162.6 million up from $133.1 million in the same quarter last year. Adjusted operating earnings were $180.6 million, a 20 percent increase from $150.6 million. Neiman's believes adjusted operating earnings, which exclude amortization, acquisition costs, non-cash charges and other costs, is a more meaningful representation of the company's economic performance.For the nine-month period, earnings rose 30 percent to $127.8 million from $98.6 million. Operating earnings reached $444.6 million from $307.7 million, while adjusted operating earnings were up 21 percent to $494.6 million from $408.8 million.
Sales climbed 9 percent to $3.41 billion from $3.13 billion. The quarter's results reflect the purchase of the minority interest and the sale of Kate Spade LLC for $62.1 million in December 2006, as well as the sale of Neiman's majority interest in Gurwitch Products LLC in July 2006.
Dallas-based Neiman's was taken private in October 2005 by investor group TPG Capital and Warburg Pincus LLC.
The company reached $631 in sales per square foot. "We achieved these improvements during a period of opening new stores, which is generally less productive in the first couple of years,'' Tansky said.
He also said operating margins hit a new third-quarter record — 16.8 percent compared with 15.2 percent a year ago.
Sales at the Neiman Marcus stores rose 4.8 percent, while the Bergdorf Goodman unit posted an 11.1 percent gain. Tansky also said the Internet business has been soaring, rising to $121 million in sales last quarter, though the Horchow catalogue division has been "a little bit difficult and the home business nationally seems to be a little bit soft." Tansky said strength on the Internet has offset weakness in the catalogue business, which experienced a planned decrease in sales volume. "We have both eliminated catalogues and circulation to certain customers that didn't meet acceptable profitability levels."
Tansky credited the strong earnings to a combination of leveraging expenses, improving margins and a greater proportion of full-price selling. Operating margins improved 150 basis points from last year, and were 18.5 percent of sales, an all-time high for the business.
He said the smallish, 80,000-square-foot Austin, Tex., store started off with great momentum and can expand by 35,000 square feet. A unit in Charlotte, N.C., also opened last fall. Additional locations are planned. They are: a 100,000-square-foot unit in Natick, Mass., in the fall; a 120,000-square-foot unit in Topanga, West Los Angeles, in fall 2008 and a 120,000-square-foot store in fall 2009 in Bellevue, Wash."Oyster Bay [on Long Island] has shifted due to ongoing permit delays," Tansky said. It's now seen opening in the fall 2010. A 90,000-square-foot unit in Princeton, N.J., is planned for 2010.
Over the past year, Neiman's has opened three smaller Cusp units, selling contemporary merchandise. "We plan to open a fourth in Northbrook, Ill., in next couple of months," Tansky said. "We continue to make adjustments to this model. It's in the early R&D stages. We are very pleased with the changes."
Tansky also stressed the importance of remodels. When a store has a 10th anniversary, Tansky explained, it needs some updating and the level varies. We prefer to remodel and expand the store, if its appropriate to the sale and the community it's in."
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