Neiman Marcus Inc., despite a fourth-quarter loss due to retiring debt and stiffening competition online, turned in a profitable year and is now putting more of its time and money into technology, “360-degree” marketing and service.
“We are really trying to make sure we are offering great customer service on a broader basis,” Neiman’s president and chief executive officer Karen Katz told WWD. “We’ve always been known for service with the 20 percent who know us and love us. Now we are changing the culture to be more inclusive.”
She also cited investments to upgrade “all of our systems,” including merchandising and the company’s Web sites, as well as tools that associates can use in stores to sell and communicate with customers. “From soup to nuts, we are taking a fresh look at all of the technology,” Katz said.
Neiman’s reported a net loss of $61.4 million for the fourth quarter of fiscal year 2011 ended July 30, compared to a $32.8 million loss in the year-ago period. The latest loss was largely due to $42.7 million in one-time after-tax charges related to retiring debt. The adjusted net loss for the quarter was $18.7 million.
Katz also cited some disappointment in gross margins at NM Direct due to markdowns from over buying in certain categories and higher costs stemming from free shipping offers online. “It’s a reminder that the e-commerce business has become increasingly competitive, both in pricing as well as shipping costs,” Katz said during a conference call. “We still have work to do integrating content into the site, improving functionality and maximizing our online marketing, all of which can lead to improved conversion and ultimately customer retention.”
While shopping patterns at the luxury chain have been good, there’s no guarantee for the future. “We are very aware that our customers are very in tune to the market and the economy,” Katz said. If the economy slips further, “That could temper our customers’ zeal for shopping,” she cautioned.
Nevertheless, Neiman’s ceo stressed fiscal 2011 was a very good year for the top line, as well as for controlling expenses, noting that sales increased 8.4 percent to just over $4 billion, versus $3.69 billion a year ago, amid strong regular price selling across opening, middle and top price ranges. On a comparable basis, sales rose 8.1 percent.
In the fourth quarter, comparable revenues rose 11 percent, driven by a 15 percent gain in e-commerce sales, while total revenues rose to $919.7 million from $826.3 million. Earnings before interest, taxes, depreciation and amortization for the quarter were $67.5 million compared to $59.8 million in the prior year, an increase of 13 percent, while for the year there was a 17 percent increase in EBITDA to $524.7 million from $446.9 million.
Full-year net income was $31.6 million, versus a loss of $1.8 million in the prior year. Operating income rose 42.2 percent to $329.7 million from $231.8 million. EBITDA rose 17.4 percent to $524.7 million from $446.9 million.
Katz also cited a rebound in Florida; particularly strong business at Bergdorf Goodman, and said that, so far this fall, there’s been strong selling in shoes and handbags as well as men’s wear across all categories, colored denim, shades of red, and gold designer jewelry. “The key fashion trends have sold well at all price points,” Katz remarked.
Katz even said consumers to some degree are getting accustomed to the market volatility and suggested they’re less likely to curb spending on daily Wall Street swings. “The customer has been very deliberate with her shopping since we came out of the recession, very thoughtful. Market volatility is becoming part of the new normal,” she said.
To sustain the shopping momentum, Neiman’s is seeking to broadly improve service. Katz said the store recently interviewed affluent customers spending at least $5,000 a year on luxury and fashion and determined that they wanted assistance in locating out-of-stock merchandise, a gracious and warm welcome, less stringent return policy and enhanced amenities, such as stylists to help them create wardrobes. In response, Neiman’s has streamlined how associates locate merchandise between stores, deployed mystery shoppers to gauge the customer experience, eased return policies, provided additional clienteling tools to sales associates, sent out customer satisfaction surveys via e-mail, and hired associates with a greater proclivity to customer service.
On the marketing front, Katz outlined how Neiman’s campaign to launch celebrity stylist Rachel Zoe’s collection reflects the store’s new “360-degree” marketing approach. The collection was featured “at every touch point in the store and online, in print and social media outlets like Facebook and Twitter.”
In addition, banner ads ran on the Web, in traditional advertising and in Neiman’s own publications. Zoe’s appearances at certain NM stores were video-ed, put online on different sites, and e-mailed out. Zoe’s interview with Neiman’s fashion director, Ken Downing, was also dispersed digitally, and there was a Rachel Zoe gift-with-purchase, a special section on Neiman’s Facebook page and an interactive styling challenge called Oh So Zoe.
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Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
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