Shoes and handbags have led the luxury rebound, but ready-to-wear is showing signs of life, according to Neiman Marcus Group president and chief executive officer Karen Katz.
“The big change between fall and resort was that the ready-to-wear business picked up pretty significantly. Trends for spring are selling very, very well,” Katz said, citing bohemian influences, corals, flat sandals and floral prints. A lack of color and fabrics that were too heavy dragged down the fall rtw season.
“The minute we started receiving early spring and resort, the business in ready-to-wear started lifting,” Katz said.
She discussed sales patterns as NMG reported that second-quarter profits rose more than five-fold due to strong full-price selling and steady shopping by luxury and aspirational consumers. Last quarter, Florida, northern California and the Northeast were the strongest areas, and Bergdorf Goodman was “extremely strong.”
Neiman’s said net income for the quarter ended Jan. 29 reached $21 million versus $4 million in the comparable period last year. Revenue rose 6.3 percent to $1.17 billion from $1.1 billion in last year’s quarter, including a 6.3 percent increase in direct marketing volume to $235.1 million. Comparable revenues were up 6 percent.
Gross margin gained 133 basis points, to 32.3 percent of sales from 30.9 percent, in the year-ago period.
Capital expenditures in the quarter more than doubled, to $22.8 million from $11.1 million in the second quarter of 2010. Cash and cash equivalents grew to $530.7 million from $500.7 million a year ago.
“Our total financial results were strong,” Katz said, driven by increases in gross margins resulting from higher full-price selling and disciplined inventory management. “Throughout the quarter we maintained our focus on full-price sales and delivering exceptional customer service.”
However, Katz did express concern about Neiman’s direct sales in the holiday period. “The holiday selling window continues to narrow to the final two weeks to 10 days before Christmas. Holiday has become increasingly competitive both in-store and online.” Also, over investments in online marketing, some category misses and increased competition hurt the performance. “None of this lessens our enthusiasm for the online channel,” Katz said, noting that post holiday, sales online rebounded, with an 18.3 percent increase in January, and 13.2 percent rise in February. “Our customers have been very open to using technology and social media to shop,” she stressed.
Katz said a number of strategies are being developed to bolster the online business, including events and shopping opportunities targeting “our Facebook friends.” She also noted that Neiman’s sent e-mails with embedded videos of Donna Karan and Jason Wu fashion shows to stimulate preorders.
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