NEW YORK--More than offsetting a strong performance by the Neiman Marcus division, a struggling Contempo Casuals operation dragged the Neiman Marcus Group into the red for the fourth quarter and year ended July 30.
In releasing the figures, the company stated that the outlook is good for improved operating results going forward, noting that all signs point "toward a healthy Christmas selling season."
In the quarter, before preferred dividends payable to its parent, Harcourt General Inc., NMG lost $2 million against a year-ago profit of $2.6 million. After preferred dividends of $6.8 million in each fourth quarter and accretion of the preferred shares, there was a loss of $9.3 million in the latest quarter and a loss of $4.7 million in the same period a year ago. Sales were down slightly to $461.9 million from $464.2 million.
For the year, earnings before preferred dividends and a year-ago accounting charge plunged 72.8 percent to $15.9 million from $58.6 million. After preferred dividends of $27.2 million plus accretion charges in each year, and an accounting charge in the previous year, NMG showed a loss of $13.2 million against a profit of $18.3 million, or 48 cents a share.
Sales were up 3.8 percent to $2.1 billion from $2 billion.
"Their core business is doing fine, but they are being battered by Contempo Casuals, said Edward Weller, retail analyst with Robertson, Stephens & Co., San Francisco. "There are too many junior apparel stores in American malls and I think Neiman's management is doing the right thing with Contempo Casuals. They're taking their markdowns and shrinking the operation."
For the year, the Neiman Marcus division had a 21.1 percent increase in operating earnings to $148.2 million from $122.4 million. Sales were up 7.7 percent to $1.56 billion and comparable-store sales were ahead 7.6 percent. Revenues of NM Direct were up 8.2 percent.
Robert J. Tarr Jr., president and chief executive officer of NMG, said Neiman's stores had lower expenses, and mail-order business improved its margins.
In the fourth quarter, Contempo had a "significant operating loss due to an aggressive markdown program in a successful effort to purge inventories and further position the business for better operating results in 1995," Tarr said.
In the year, Contempo Casuals' operating loss swelled to $37 million from $14.1 million. In addition, Contempo took a $48.4 million restructuring charge during the third quarter to cover the cost of closing 40 Contempo stores along with discontinuing Pastile stores, a new retail concept the company was testing. Pastile suffered operating losses of $9.5 million in l994 and $10.5 million in 1993.
--Fairchild News Service

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