Neiman Marcus Group, through sustained digital sales growth and stabilizing its full-line stores, is seeing revenue growth and expecting the momentum to carry through the holiday season.

“In this very challenging retail environment, we delivered positive growth for the first time in a couple of years,” Karen Katz, president and chief executive officer of the Neiman Marcus Group, told WWD on Tuesday, referring to the performance in the company’s first fiscal quarter.

The net loss for its first fiscal quarter ended Oct. 28 rose to $26.2 million from $23.5 million in the year-ago quarter. But comparable revenues rose 4.2 percent and total revenues rose 3.8 percent to $1.12 billion from $1.08 billion a year ago. Katz said the slight increase in the net loss was a result of a $10 million increase in incentive bonuses stemming from the business turning positive.

Adjusted earnings before interest, taxes, depreciation and amortization were $123.5 million versus $122.9 million a year ago. Operating earnings rose to $31 million from $25.3 million. Interest expenses were $76 million in the quarter, versus $72 million a year ago. In terms of liquidity, “We are in good shape making interest payments,” Katz said. The retailer ended the quarter with $657 million in liquidity, and its big term loan doesn’t come due until 2020.

With the stock market strong, employment growth continuing and consumer confidence at a 17-year high in October, shoppers are in a position to spend more and show signs of opening their wallets more often. Generally, retailers and trade groups are expecting holiday 2017 sales to be up around 3 to 4 percent.

While benefiting from improved macro conditions, Katz explained Neiman’s own growth by citing investments in the company’s “digital first” strategy and double-digit online sales growth; rebounding trends in South Florida and Houston in the aftermath of the hurricanes; oil prices rising, and fresher inventories that are more aligned to best-performing categories and focused more on buy-now-wear-now merchandise making the company less dependent on weather patterns.

“It was a combination of really good online growth and stabilizing our full-line stores,” Katz said, discussing the first-quarter’s revenue growth. “Over the last 12 to 18 months we have really been working on our strategies of how we have to deliver our product and personalized service to our customer. Investments in our businesses are aligned to the way our customers shop and those investments are beginning to pay off.”

Neiman’s “digital first” program revolves around “bringing the best elements of that personalized service offered in our stores to  online,” Katz said. “I don’t really believe anyone has done it this way. Lots of people bring up algorithms and data, but we are going deeper to really serve customers…with stylists and concierge services to fit in best with what their online needs are.”

Last quarter, “I’m happy to say women’s apparel was positive at all price ranges,” Katz said. “It’s been a long time since we’ve been able to talk about that. The bag and shoe businesses have been good. Jewelry, which has been laggard for a number of quarters, saw some positive momentum. The men’s business, which wasn’t strong a year ago, actually held up pretty well,” with men’s shoes most strong, while men’s shirts and ties not as robust.

Almost a third of NMG’s revenues is generated online. “We will continue to see online sales increase,” Katz said confidently during the interview. “We think we have a long way to go till where it caps. It will quickly be in the 40 percent range.” The ceo said it was difficult to project a cap for online sales. Last quarter, online sales at Neiman’s grew 14 percent, while the full-line stores were flat.

Katz pointed out that Neiman Marcus is sometimes unfairly “lumped in” with department stores in terms of the challenges faced such as having too many locations, and noted some advantages such as the high online penetration and relatively modest brick-and-mortar footprint. “We are vastly different. We don’t have 400 or 800 stores. We only have 42 full-line stores in well-placed locations. We believe we are positioning them for growth.”

Asked if she senses momentum going into Thanksgiving and the holiday season, Katz replied, “We do. I’ve been ceo of the company for seven years and I feel we are better positioned for this holiday than we’ve been in many years. From a product perspective, I like to say we have gifts from $10 to $10,000. We are well positioned to take good care of our core customers and continue to attract new customers.

During a conference call, Katz said positive selling trends are continuing in the current quarter.

In a short update on the Neiman Marcus store in Manhattan’s Hudson Yards development, Katz said the store is on schedule to open in March 2019, key design elements have been finalized, and over the next three months interiors are being constructed for Chanel and Louis Vuitton shops. “We are confident the Hudson Yards store will define the store of the future,” Katz said.

load comments
blog comments powered by Disqus