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Neiman Marcus Group Scaling Back in China

The company is close to disclosing that it’s pulling out of its investment in Glamour Sales Holdings, the Asian-based e-commerce site.

The Neiman Marcus Group Ltd. LLC is taking another step back from its stake in China.

The Dallas-based luxury retailer is close to disclosing that it’s pulling out of its investment in Glamour Sales Holdings, the Asian-based e-commerce site specializing in flash sales. An announcement could come as soon as today.

“They are actively looking for some new capital,” said Ginger Reeder, NMG’s vice president of media relations and corporate giving. “We are a minority shareholder. We don’t have any interest in becoming a majority partner. We realize that may result in our exiting [Glamour Sales]. This is being driven by Glamour Sales.”

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At its Dallas headquarters, NMG continues to operate a Web site for the China market. While Neiman’s ships to many countries, China is the only country where the company has a dedicated site — with Mandarin translation, size conversion charts and customized creative.

NMG recently decided not to hold inventory in Chinese warehouses and instead to ship to Chinese customers from the U.S. Glamour Sales had been handling the fulfillment from China.

Reeder said that Neiman’s offers its full assortment in China. “Clearly with the business model operating now, we still believe there is potential [in China] or we wouldn’t have a site in Mandarin,” she said. “This is a better way for us to serve the Chinese customer. We have a much larger assortment now and they like to see the breadth of the assortment, particularly those who have traveled to the U.S. and seen our stores. This is a much more efficient business model.”

In March 2012, Neiman’s disclosed a $28 million investment in Glamour Sales Holdings, and subsequently invested another $10 million in Glamour, leading to a 44 percent stake. Glamour helped Neiman’s launch neimanmarcus.com.cn more than a year ago and also has helped migrate shoppers to the Neiman’s site. In addition to products, the site features editorial content, fashion expertise and behind-the-scenes videos about luxury brands. The partnership also involves Neiman’s helping Glamour Sales expand flash sales.

Neiman’s challenge is to get Chinese consumers more familiar with its brand through marketing, fashion bloggers and editorial content. Last spring, the retailer staged its first fashion show in Mainland China in Shanghai’s historic Bund waterfront to generate awareness. Neiman’s also wants more Chinese to shop Neiman’s stores in the U.S., including Bergdorf Goodman.

It’s rare for Neiman Marcus Group to invest in other brands but the company has taken significant stakes in a couple of high-profile firms in the last two decades. The luxury retailer acquired a 56 percent stake in Kate Spade in 1999 for $33.6 million, and expressed big plans for the brand, including store openings. However, in 2006, NMG sold Kate Spade for $124 million to Liz Claiborne, which proceeded to more aggressively reinvigorate the brand.

NMG also once owned Gurwitch Products, the licensee of Laura Mercier. Gurwitch was founded in 1995 by Janet Gurwitch, who was a former executive vice president at Neiman Marcus. In 1998, Neiman’s bought a 51 percent stake in Gurwitch but sold the company in 2006 to Alticor Inc. for an undisclosed amount.