NEW YORK — Neiman Marcus Group said Thursday third-quarter income leaped 23 percent as the luxury retailer enjoyed more full-price selling, lower inventory and expenses and special items that helped the bottom line.
This story first appeared in the May 31, 2002 issue of WWD. Subscribe Today.
The Dallas-based owner of Neiman Marcus stores and Bergdorf Goodman said profits reached $47 million, or 98 cents a diluted share, for the three months ended April 27, versus the $38.2 million, or 80 cents, earned in the comparable quarter last year. Cumulatively, special items added $5 million to the quarter’s net income. Excluding a series of credits and charges, earnings were $42 million, or 87 cents a diluted share, matching Wall Street’s consensus estimates.
“We are beginning to see some positive signs from our customers,” Burt Tansky, NMG’s president and chief executive, said on a conference call. “We focused on our core customers with an emphasis on regular-price selling.” In addition, he said the retailer continued to concentrate on inventory management, sale events and both corporate and store expenses.
Although sales were down compared with last year, they still were better than expected, falling 0.8 percent to $692.7 million from $698.5 million. Comps declined 1.9 percent. Sales at specialty stores were down 1.2 percent, to $573 million, and, on a same-store basis, off 2.6 percent. Comps at Neiman’s stores were down 2.3 percent. Neiman Marcus Direct had sales of $93 million, a decrease of 4.1 percent.
NMG also reported May same-store sales were down 6.1 percent for the specialty store group, impacted by a calendar shift of the men’s sale at NM to June from May. Tansky said that, despite numerous signs of improvement, “we believe there is still a long way to go before customer spending returns to levels of two years ago.”
Although it expects gross margin improvement in the current fourth quarter, NMG said it expects same-store sales to slip 2 to 4 percent due to the combination of lower sales productivity in the summer months and spring merchandise markdowns.
Tansky also noted that a 10.5 percent reduction in its specialty stores’ inventory allowed for fewer promotional events and more full-price sales of spring merchandise, allowing gross margin to improve more than 100 basis points.
Top sellers were soft tops, especially with embroidered detail and folk embellishment; women’s contemporary sportswear, specifically denim; shoes; jewelry; women’s designer apparel; men’s apparel and eveningwear.
Kate Spade sales were soft in the quarter, a trend expected to continue in the current fourth quarter, while Laura Mercier continues to perform well.
Results for the third quarter include $17 million credited to NMG’s operating results due to the elimination of a reserve for vacation time and a $8.2 million one-time pre-tax charge related to the write-off of its investment in WeddingChannel.com, an Internet bridal registry service. In addition, the write-down of the carrying value of fixed assets of two Neiman Marcus Galleries to estimated fair value and the write-down of the estimated losses associated with consolidation of excess warehouse space reduced net income. Saying it was NMG’s first increase in year-over-year earnings per share in six quarters, Eric Beder with Ladenburg, Thalmann & Co. Inc. said the quarter was “impressive considering the high-end consumer was not really shopping.” Referring to reductions in inventories, markdowns and expenses, he attributed the stronger results to management “finally having the whole thing buttoned down.”
Looking ahead, Beder said he was “very encouraged” the high-end consumer is coming back, specifically in the second half of the calendar year. He pointed to the successful trunk show events at both NMG and Saks Fifth Avenue, usually a good barometer of future results, for his upbeat forecast.”