Neiman Marcus Group Inc., weathering overstocks, a highly promotional season and the challenging economy, posted first-quarter earnings and sales gains.
For the fiscal first quarter of 2008 ended Oct. 27, Neiman's net earnings reached $78.8 million versus $27.2 million a year ago, when the company was dragged down by losses from discontinued operations.
Adjusted operating earnings, which the luxury retailer believes reflect a more accurate measure of performance, rose 4 percent to $175.2 million compared with $168.1 million in the year-ago period.
On a non-adjusted basis, operating earnings were $189.7 million compared with $154.3 million a year ago, reflecting a $32.5 million onetime gain from freezing pension and retirement benefits as the chain implements a new plan for retirees.
Total revenues rose 9 percent to $1.13 billion versus $1.04 billion in the prior year, and same-store sales increased 6.5 percent. Sales a square foot averaged $647 in the past 12 months, compared with $613 the year before.
The Neiman Marcus chain posted a 5.4 percent comp gain, and Bergdorf Goodman had an 11.6 percent increase.
The company also reported November sales, which were up 5.8 percent on a comp basis, with the specialty retail sector up 6.1 percent, while the direct business grew 4.3 percent.
"We believe this is a good start to the [holiday] season," said Burt Tansky, chairman, chief executive officer and president, in a conference call, adding, "The best of our merchandise continues to sell very well."
In the quarter, the company was propelled by designer handbags, shoes, beauty, precious jewelry and men's furnishings, where sales were strongest.
Among the disappointments: higher markdowns contributing to a gross margin decline of 50 basis points, some buying mistakes and tepid consumer reaction to European designer collections generally. Neiman's boosted inventories 11.8 percent in the quarter, and 8.1 percent excluding new stores.
There were also higher costs associated with promoting the chain's centennial and running more promotions to bring down inventories. Neiman's said the gross margin rate also will be lower in the second quarter, but stressed inventories are moving more in line with sales and that the buying is more "conservative" for spring."New cruise-resort merchandise is getting very positive response from our stores right now," Tansky said. But Neiman's merchants "have to be more selective and highly focused on what we buy, and must continue to keep sight of the customer to see if she is slightly changing her buying trends."
Regarding the first quarter, Tansky said, "We were a little more aggressive [in buying] than we normally are. It didn't come together so we are going to get back into balance and we are moving quickly to do so....As the season progressed and sales did not materialize commensurate with the inventory levels we had planned, our merchants reacted quickly" by triggering markdowns and working with vendors to find a solution to overstocks.
"The issue is not the demand side," Tansky said. "Customers continue to demand from us quality, and we are delivering it. The best of our merchandise continues to sell very well. As spring merchandise comes in, we'll get that inventory managed the way we want it to be and the way it should be."
Tansky said the bridge business is "OK'' despite some reduced gains, contemporary sportswear is holding its own and jewelry and handbags are strong. Business in California seems to be "an industry-wide problem."
Nationwide, "the environment has proven to be somewhat challenging this season," Tansky said. "We were pleased with the results. It was a quarter of great reflection as we celebrated our 100th anniversary."
The corporation will continue to invest in renovations and expansions, Tansky said. The Atlanta store is being redone, adding 50,000 square feet and seeing continued strong business remains during the remodeling. By early fiscal 2009, construction will be completed.
In a breakdown of sales, NM Direct was up 7.1 percent, including up 23 percent on the Internet. With the catalogue, "We continue to reduce circulation and are shifting sales to online," Tansky said. He added the home segment of the Horchow direct business continues to be challenging.
Neiman's intends to further spur online sales by adding more virtual trunk shows and new tools to increase interaction with customers, Tansky said.
Commenting on Cusp, Neiman's new chain for contemporary goods and aspirational customers, Tansky said, "All four of [the stores] are doing quite well. We are constantly trying to understand more and more and fine-tune the assortments." A decision on whether to roll out Cusp or pull the plug will be made early next year.
“What he has done at Vuitton is really exceptional,” said @gameofthrones’ actress Gwendoline Christie on @mrkimjones’ final show for @louisvuitton. “He has rebooted luxury in terms of making it commercial, viable and contemporary. And most importantly artistic. He has never compromised his artistic vision for the sake of commodity.” (📷: @zefashioninsider)
After seeing a demand for men’s wear from its customers, British contemporary women’s wear label @ariesarise has added a men’s wear component and will launch a unisex collection with @mrporterlive. The 20-piece collection includes jackets, denim, logo T-shirts and more with deconstructed ‘90s vibes. Set to launch on January 18, you can shop the pieces on Aries’ website and on mrporter.com. #wwdfashion
“And so spending so much time with a character who thinks like that, inevitability you try and analyze yourself and go back and think about your own demons and dark chapters that you had in your life,” says @thedanielbruhl of his role in TNT’s “The Alienist.” The show, set in the Gilded Age of New York, also stars Dakota Fanning and Luke Evans. Head to WWD.com to read about how 39-year-old Brühl prepared for the role and why he thinks the show is so relevant to today #wwdeye ( 📷: @Eriktanner)
Now that Celine Dion’s collection has topped $10 million in sales, the pop superstar, fashion icon and newly-minted industry player is eyeing growth in Asia. Read the full report by @tiffanyap, link in bio. #wwdnews #celinedion
“My personal philosophy to beauty is paying attention to oneself. I love to be outdoors, lots of fresh air, trying to take care of yourself as best you can. I always notice that comes through,” says Felicity Jones, the global face of @shiseido-owned @cledepeaubeauteus, which launches today. Head to WWD.com to read more about the actress’ love for beauty and how she prepared for her new role in “The Basis of Sex,” playing the young Ruth Bader Ginsburg. #wwdbeauty (📷: @dandoperalski)
Among the familiar faces at @off____white’s show was a surprise figure: Japanese artist @takashipom, pictured here on Wednesday morning. Other show-goers included @jerrylorenzo, who spoke about his upcoming project: a @nike collaboration for back to school, with designs inspired by his childhood on the West Coast. Sitting in the front row were Future, Don Crawley, @miguel and more. See the rest of the photos on WWD.com #wwdeye (📷: Stephane Feugere)
According to @laurentsai, former “Terrace House: Aloha State” cast member, she didn’t know she was auditioning for the Japanese version of “Real World.” “I was telling a couple of my friends and someone’s like, ‘That sounds a lot like Terrace House.’ I was like, ’No it can’t be.’” Turns out, it was. But Tsai isn’t just a reality star — she’s an illustrator who has worked with Starbucks Japan and most recently, she’s dipping her toes into the fashion world. Head to WWD.com to read about her time on the show, modeling and her art. #wwdeye (📷: @danieldorsa)
More changes are coming to New York Fashion Week: Beginning with the spring 2019 collection, @alexanderwangny will move his New York show to June from September, adopting a biannual schedule with collections shown in June and December. Additionally, the @cfda is planning for an official summer/winter fashion season taking place as soon as June and December 2018. Read more about the upcoming changes on WWD.com. #wwdnews #wwdfashion (📷: @slovekinpics)