Whether Neiman Marcus Inc. gets sold or goes public this year is anyone’s guess. Yet one thing is certain — business isn’t bad at all.
This story first appeared in the June 5, 2013 issue of WWD. Subscribe Today.
On Tuesday, the Dallas-based Neiman’s said third-quarter profits rose 13 percent to $70.8 million from $62.6 million a year earlier. Neiman’s revenues for the three months ended April 27 rose 3.8 percent to $1.1 billion from $1.06 billion. Comparable sales increased 3.6 percent.
Those numbers — and the fact that there were several strong performing categories last quarter, notably women shoes, designer handbags, beauty and men’s wear — put Neiman’s in a positive light. But women’s apparel, which has been up and down at the retailer for several seasons, was not cited as a winner. Weather and moderate consumer demand could have impacted some merchandise areas. Tax breaks for the wealthy being rescinded and a potential stock market correction could also factor into Neiman’s performance.
During a conference call, executives emphasized advancements in technology, omnichannel initiatives, remodels and business overseas, though there was no word on the company’s future as it pertains to ownership. TPG and Warburg Pincus bought the company for $5.1 billion in 2005. Sources said investors are working with Credit Suisse to explore a sale or an initial public offering.
“We continue to benefit from the technology investments we have made, specifically the smartphones we rolled out to our sales associates,” said James E. Skinner, executive vice president, chief operating officer and chief financial officer, during the call. “For example, during the quarter we launched an application for our sales associates to help them track the status of their customer’s alterations. This tool provide our associates yet another way to help keep our customers updated and improve their overall shopping experience.”
Skinner cited other advancements on the service and technology fronts, including:
• The launch of a look book application for smartphones to help associates fulfill customer requests in the stores.
• Sending electronic receipts via e-mail.
• Online tools that help customers determine their best size and fit, and help men with putting together shirts and ties to complete the look.
• Sharing inventory between channels. “We’ve begun to add access to online-only merchandise through our point-of-sale in our stores for categories such as ladies shoes and designer handbags, providing our customers an even greater variety of merchandise as they shop at our stores,” Skinner said.
“In addition, at Bergdorf Goodman, we have expanded our shared inventory merchandise categories to include designer jewelry. The amount of sales that are attributable to shared inventory continue to grow and has proven to be a very successful project.”
Updating business overseas, Skinner said through its partnership with Borderfree, which was formerly called FiftyOne Global Ecommerce, neimanmarcus.com ships to customers in over 100 countries. “We are very pleased with the amount of business we’re generating, all without any incremental advertising or marketing, which speaks to the strength of our brand,” Skinner said.
In China, Neiman’s has modified its business model, since launching neimanmarcus.com in that country by fulfilling all customer orders from its U.S. inventory and shipping directly to customers in China rather than holding inventory in Chinese warehouses. Neiman’s believes this will provide a wider breadth of assortment in a timely fashion for Chinese customers. Neiman’s maintains a team for customer care, marketing and Web merchandising in Shanghai but recently reduced its size.
In March 2012, Neiman’s disclosed a $28 million investment in Glamour Sales Holdings, an Asian-based e-commerce site specializing in flash sales. Neiman’s has since invested another $10 million in Glamour and now owns a 44 percent stake. Glamour helped Neiman’s launch neimanmarcus.com.cn last December and is helping migrate shoppers to the Neiman’s site.
Skinner also highlighted the remodel of Neiman’s Michigan Avenue store in Chicago, where the men’s department and most of designer jewelry has been redone, and work is currently being done in cosmetics, ladies’ shoes, and contemporary sportswear. The store is expected to be completely remodeled by spring 2014.