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NEW YORK — Despite the stellar earnings reported this week, The Neiman Marcus Group is far from content.

Demonstrating that it wants growth beyond its 36 luxury-filled stores and over-the-top catalogues, Neiman’s named Steven Dennis, a former Sears, Roebuck executive, as senior vice president of strategy, business development and multichannel marketing to explore new avenues of growth. His first day on the job was Thursday.

Meanwhile, Neiman’s already might have a target in its sights. Speculation is heating up that it is examining Barneys New York to determine whether it should make a bid.

Regarding the appointment of Dennis, Burt Tansky, president and chief executive officer of The Neiman Marcus Group, said Thursday, “We never had a person like this on board. It’s a new office and we’re very excited about the prospects. This just reinforces our team, puts a new player on board who will help us with a number of issues that we have anyway.”

He said Dennis will help in strategic planning, “linkages” between stores, catalogue and Internet selling channels and the search for acquisitions.

In December 1998, NMG divulged a strategy to buy relatively undeveloped brands with perceived growth potential and purchased a controlling interest in Gurwitch Bristow Products, manufacturer of Laura Mercier makeup. In 1999, the company bought a controlling interest in Kate Spade, but there have been no further acquisitions since.

“We’ve been looking at a lot. You’ve got to be patient,” said James Skinner, chief financial officer. “We continue to look at a lot; with Steve we will be able to look at more.”

Skinner said the search includes brands, retailers and multichannel companies.

Tansky and Skinner declined to comment on the Barneys speculation, though Tansky did say that with Dennis joining the team, pursuing acquisitions and developing new strategies becomes “more intense.”

Although Neiman’s was mentioned as a suitor as early as July when Barneys was first put on the block, a source said that rumblings about Neiman’s interest heated up two weeks ago.

One investment banker said, “Of all the names mentioned as suitors, Neiman’s makes the most sense. Neiman’s is well run and buying Barneys could be the answer to how Neiman’s grows its New York business. In addition, Neiman’s brings a lot to the table for Barneys in terms of back-office synergies and buying power. This combination could be the perfect partnership.”

This story first appeared in the September 10, 2004 issue of WWD. Subscribe Today.

Speculation Neiman’s was examining Barneys New York came on the heels of Neiman’s stellar year-end report card showing an 87.4 percent leap for the fiscal year ended July 31 and a 187 percent spike in fourth-quarter earnings. For fiscal year 2004, NMG’s total revenues were $3.55 billion, compared with $3.1 billion in the previous year. Comparable revenues increased 14 percent for fiscal year 2004. Net earnings for fiscal year 2004 were $205 million, compared with $109 million for fiscal year 2003.

While showing strong results, garnering wide praise for consistent performances and for having an unwavering commitment to the luxury market even in down times, there are some analysts and retailers raising questions about Neiman’s growth potential. With 36 stores across the country, the chain is already operating in most of the affluent markets that can support one of its stores.

No openings are slated for this year, but there will be openings for fall 2005 in Boca Raton, Fla., and San Antonio, and in fall 2006, in Charlotte, N.C., and Natick, Mass. Taubman Centers is planning to build a mall in Oyster Bay, Long Island, and has stated that Neiman’s plans to be an anchor tenant, though Neiman’s has yet to confirm the opening.

A Barneys buy would give the $3.55 billion Neiman’s an immediate $400 million jolt in volume and eliminate a competitor in New York, Chicago and Beverly Hills. However, analysts have raised concerns that Barneys may be overpriced, with a price tag reportedly set around $500 million, and that Barneys, along with its Co-Op chain of contemporary sportswear stores, also has limited growth potential due to an appeal that targets an even narrower customer base than Neiman’s. Barneys also has some high expenses, including real estate costs.

Years ago, Neiman Marcus Group seriously considered opening a Bergdorf Goodman division outside of New York, but when asked if that strategy could be revisited, Tansky responded, “No, no, no.”

Bergdorf’s once had a branch in White Plains, N.Y., which closed when management determined that resources were better spent on building more Neiman’s branches and improving Bergdorf’s flagship in Manhattan.

In a conference call Tuesday, Tansky expressed some caution about the months ahead. “Beginning this year, sales growth will be more challenging,” he said, predicting a 7 to 9 percent comp gain in the first quarter, against 10.7 percent gain in the first quarter of the previous year. Still, the first-quarter guidance was an increase from a prior estimate for positive 5 to 7 percent first-quarter comps.

Dennis is a 12-year veteran of Sears and last held the post of vice president of corporate strategy. During his tenure with Sears, Dennis led multichannel efforts and was also instrumental in developing the new “Sears Grand” off-the-mall concept and the acquisition of Lands’ End.

Prior to Sears, he spent five years with The NutraSweet Company in a variety of business development and new product marketing roles, and two years with Booz, Allen & Hamilton Inc. as a strategy consultant.

With contributions from Vicki M. Young