Given the slowdown in luxury spending last year, Neiman Marcus Inc. headed into 2010 with some signs of life. Now the challenge will be to flourish and make a dent in its sizable debt, as even high-end consumers acclimate to their new economic realities.

December comparable-store sales inched up 4.9 percent at the firm’s flagship and Bergdorf Goodman businesses, slowly rebuilding from a 31.2 percent decline a year earlier. And as of Jan. 2, the retailer had about $595 million in cash on hand, up from the $330 million cushion it had in early 2009. Neiman’s also had a clean credit facility slate, with no outstanding borrowings under its $600 million asset-based agreement. However, long-term debt stood at $2.97 billion as of Oct. 31.

The Dallas-based firm, which TPG and Warburg Pincus bought for $5.1 billion in 2005, has made some course corrections during the downturn, cutting expenses and inventories and shifting assortments to offer more goods at mid and opening price points. But president and chief executive officer Burt Tansky is largely relying on the formula that helped build Neiman’s up to carry the company forward.

“We have no intention of changing our business model or trading down,” Tansky told Wall Street analysts on a conference call last month. “It’s important to reiterate that we will continue to offer our customers the luxury and designer merchandise that they want to buy and, in fact, some of our best-selling merchandise is at the upper end of our price ranges.”

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