Neiman Marcus Inc. may be losing money and cutting inventories and expenses — but there’s no backing away from the mission.
“This downturn dramatically impacted our customers both financially and emotionally. However, we are confident our customers still have a strong desire for luxury merchandise and the wherewithal to shop,” Burt Tansky, president and chief executive officer, stated Wednesday, during a conference call reviewing fourth-quarter and year-end results and the priorities for surviving the Great Recession.
“We believe our customer still desires the brands we sell, but will be more discriminating about the value of the merchandise.”
Neiman’s reported a $168.6 million net loss and 23.4 percent comparable revenue decline in its fourth quarter ended Aug. 1, and a net loss of $668 million and a drop of about $1 billion in sales to $3.64 billion for the fiscal year. Along with the fall in revenues, the company was driven into the red by depressed sales and noncash pretax impairment charges. The charges totaled $143.1 million in the quarter and $703.3 million for the year, and were related to write-downs of goodwill; the values of the Neiman Marcus, Horchow and Bergdorf Goodman trade names, and long-lived assets including property and equipment.
The focus, executives said during the call, is on maintaining liquidity and increasing cash; keeping inventories and buying in line with depressed sales trends; intensifying marketing to draw shoppers to the stores and get them to buy more at full price, and, in perhaps the most provocative and challenging tactic, getting designers already on the Neiman’s matrix to provide more merchandise in their middle price zones.
It’s a shift in the pricing largely geared to stimulate purchasing by “aspirational” shoppers reluctant to spend, Tansky said. “We will remain a destination for luxury that we have always been known for,” he said. “This strategy will unfold over the next few seasons. We will see the initial impact of our efforts this fall, but much more in the spring. It’s going to be a balance [of price points]. Maybe a little less at the top, more in the middle, but the top is going to be protected. We have created very specific pricing goals at the merchandising and vendor levels….By no means are we trading down.”
The Neiman’s team stressed the company is being conservative with the buy and with the pricing initiative, but not too conservative. Opening prices won’t be any lower and Neiman’s will continue “attracting the fashion trends,” Tansky said. “We have no intention of going to blue suits.”
Executives also emphasized there’s enough liquidity to cover debt and expenses. Neiman’s ended the year with $323 million in cash, representing an $84 million increase from the year before. The company also recently renegotiated its $600 million revolving credit facility and extended the facility’s maturity to 2013. Stacie Shirley, vice president of finance and treasurer, said the company does not anticipate using the revolver this year, “which assures vendors of Neiman’s fiscal strength.”
Tansky stressed the company also is applying “strict mechanisms” to scrutinize expenses and has greatly reduced capital spending to the point where future full-line stores, including those in Walnut Creek and San Jose, Calif., are now on hold. Both were planned to open in three or four years.
On Friday, however, Neiman’s will open its first store in the Pacific Northwest, a 125,000-square-foot unit in a new luxury project called The Shops at the Bravern located in Bellevue, Wash., just east of Seattle. “This isn’t the greatest time to be opening a store, but we studied the demographics and psychographics carefully,” Tansky told WWD. “We believe it’s a great opportunity. The area has now come to a point where a store of our ilk is going to do well.”
He also told WWD that no store closings are planned, and he cited glimmers of improving sales in August in contemporary sportswear, women’s shoes, handbags and some “hot” designer trends such as the color red, skinny jeans, leggings, platform shoes, animal prints and new looks in dresses. Still, Tansky said the company won’t have a solid read on trends until September ends. New receipts, he added, appear to have stimulated some purchasing.
Asked if business has bottomed out, Tansky replied: “It’s still uncertain. The [stock] market stability is meaningful and goes a long way in helping consumers get back on track.” He said before the company determines the economy is turning better, “our intention is to go through a few months of stable business, flat or on the upside.”
Total expenses decreased approximately $100 million for the year. “Most expense initiatives have been implemented,” Tansky said during the call. The biggest capital expenses were building the Bellevue store and for information technology.
“Fiscal year 2009 was perhaps the most challenging time in recent years for our company and luxury generally. No one could have predicted the magnitude of the falloff,” Tansky said. Neiman’s “experienced management team, marketing versatility and vendor relations were more critical than ever.”
Looking ahead, he predicted the next holiday season will be challenging given the level of off-price purchasing witnessed last year, but the reduced buy this year should mean a reduced need to adjust prices. “This holiday season will be more rational than the last, we are hoping. We know things will improve but it will be gradual,” Tansky said.
For spring, Neiman’s is still planning conservatively, “but if sales are greater than anticipated, we will be able to handle it both with what we have planned and with reorders,” said Tansky.
From overseeing America’s fastest-growing speciality retailers to codifying cool, WWD talked to the women who are leading the way for the future of beauty. Check out our Instagram Stories to see how these women built today and are creating tomorrow. (📸: @hannah_khymych) #wwdbeauty
For @laperlalingerie's spring 2018 show, the brand chose to host their event at @thevenetianmacao. With Chinese megastars @bingbing_fan and @hubing in attendance, La Perla debuted a rock ‘n’ roll-inspired collection. The show marked the start of Sands Macao Fashion Week, which runs from October 19 to 24 — the city’s first such event. Pictured here are models backstage with glimmering eyes. #wwdfashion (📷: Cheuk-Yin To)
Trending for spring 2018: top stitch design. Gone are the days of stitch just for seams — designers are using the once-minimal detail to create strong decorative elements. (📷: Paola Testa; Styled by @andrew_shang) #wwdfashion
@tradesy is turning the concept of a showroom upside down with its new space in Santa Monica. Here, the company plans to hold events, art exhibits and a showcase rare fashion pieces like this Louis Vuitton boxing set. Get all the details on Tradesy’s first showroom on WWD.com. #wwdnews
Spotted last night at the @erdem x @hm launch event: Kate Bosworth, Rashida Jones, Kirsten Dunst and Selma Blair. The party, which took place in LA, also marked the opening of their pop-up shop. “I was interested in creating a collection that wasn’t in any way disposable. It was about pieces you’d create and keep forever, things that have a permanence to it,” designer Erdem Moralioglu said. #wwdeye (📷: Katie Jones)
Renee Zellweger in yellow in 2001 and again in 2017. Chosen as one of the 12 @pantone Leading Spring Colors (and dubbed “Meadowlark”), it only makes sense that the bright hue stands the test of time and is making a resurgence this season, seen already on stars like @blakelively and @gigihadid. (📷: Donato Sardello & @rexfeatures) #wwdfashion #tbt
Dior’s 70th anniversary celebration continues with a new exhibition at the Royal Ontario Museum in Toronto. “Christian Dior,” which is scheduled to run through March 18, takes a look at the founders tenure from 1947 to 1057 and feature 40 designs. Pictured here is an evening gown from the Ailée, fall 1948-49 haute couture collection. #wwdfashion (📷: Brian Boyle)