Neiman Marcus Group posted comp sales gains in its fiscal first quarter, but its debt continued to weigh on the bottom line.
The retailer’s first-quarter net losses widened to $28.2 million from $26.2 million a year ago, but its adjusted earnings before interest, taxes, depreciation and amortization rose to $135.3 million from $122.3 million.
Interest expense to manage the firm’s debt weighed heavily, totaling $80.5 million in the quarter.
Neiman Marcus’ net sales for the quarter ended Oct. 27 slipped slightly, to $1.093 billion from $1.096 billion a year ago. Comparable revenues rose 2.8 percent.
“Our first-quarter results, marking our fifth consecutive quarter of comparable revenue increases, demonstrate the ongoing stabilization of our business. We continue to focus on delivering on our plan this year, while also positioning the company for future growth,” said chief executive officer Geoffroy van Raemdonck. “We will continue to drive innovation that enriches the shopping experience, including investing in personalization and omni-selling.”
The luxury department store has been working hard to transform and transcend its $4.6 billion in debt — the legacy of two consecutive buyouts by private equity firms.
That debt starts coming due in 2020, when the firm has to pay back its $2.8 billion term loan. Neiman Marcus was negotiating with creditors this fall, looking to push back the maturity date and swap out other debts, giving it time to hit its goal of $700 million in adjusted EBITDA in five years.
Part of the retailer’s proposal in the recent negotiations was to use many of its unencumbered leases as an additional $1.9 billion in collateral. But questions linger among debt experts if those leases are actually worth that much.
The talks were complicated, with several different constituencies — including the firm’s equity holders, its term loan lenders and bond holders. And while a filing with the Securities and Exchange Commission last week indicated that one phase of the talks has wrapped up without a resolution, there is still time for the parties to have a meeting of the mind.