The Neiman Marcus Group is laying off hundreds of workers, representing just under 5 percent of its workforce.
The cutbacks at the Dallas-based Neiman Marcus Group follows those announced in recent weeks at Saks.com, Saks Off 5th, Kohl’s Corp., TheBay.com, and Amazon.
The Neiman Marcus Group employs approximately 10,000 workers, meaning that hundreds of workers would be affected. That includes 100 workers being let go at NMG corporate, while a few hundred workers will be impacted at stores and other areas of the business.
Geoffroy van Raemdonck, chief executive officer of the Neiman Marcus Group, told WWD that the cutbacks are a result of the “volatile” economic climate, a deceleration of business since the summer, and decisions on how to best focus resources on the highest value customers. He also said that some of the displaced workers will be able to fill some vacancies. Employees impacted are being informed this week.
“We have differentiated business model focused on high value luxury customers and the most desirable luxury brands. It is differentiated and very resilient strategy. So these decisions are based on how we accelerate that competitive advantage and how and where we allocated our resources. We are continuing to invest in (catering to) high value customers and how we engage with them, and we are also continuing with our plans to renovate ten plus stores, and invest in technology and supply chain.”
Van Raemdonck also said that Neiman’s is “evolving its leadership structure by shifting technology, including tech-oriented tools and products, and customer insight responsibilities to NMG’s two brand presidents, Darcy Penick at Bergdorf Goodman and Ryan Ross at Neiman Marcus, for faster decision-making. “It is really a strengthening of their roles,” said van Raemdonck. “In a moment of volatility, execution and decision speed are critical.”
Penick, while continuing to lead all aspects of the Bergdorf Goodman brand, will assume group-level leadership of the NMG technology organization including tech-oriented products like Neiman’s Connect tool used by sales associates to interact with customers in multiple ways.
“Darcy’s strategic leadership of NMG’s product and technology roadmap will ensure the right suite of tools, platforms and resources are aligned to our most important investments in the customer experience and key capabilities across Neiman Marcus and Bergdorf Goodman,” said van Raemdonck. Penick’s added responsibilities should help accelerate NMG’s plan to grow BergdorfGoodman.com internationally.
Ross is given the additional responsibilities over customer insights for the group. “The Neiman Marcus brand continues to experience outsized growth of high-value customers and Ryan’s leadership of these key capabilities will continue fueling deeper relationships with top customers,” van Raemdonck said. “His role will accelerate customer-informed decisions across NMG.”
As a result of Penick and Ross adding responsibilities, chief product and technology officer Bob Kupbens will be leaving NMG. Kupbens was instrumental in the development of Connect, relaunching the NM app, and in the acquisition and integration of Stylize, the artificial intelligence company purchased by NMG that powers personalization and styling.
Regarding the layoffs, van Raemdonck said, “It is always our intent to minimize the impact to existing associate jobs and we take these types of decisions very seriously. We will support those associates who will be leaving the company with severance and other benefits.” Asked what kinds of positions are being eliminated, van Raemdonck replied, “It’s a little bit across the board.”
He also said while under 5 percent of NMG’s workforce is being eliminated, “We have also identified open roles to best support our operating model going forward which will be filled based on our strategic needs.”
Last April, Farfetch revealed an up to $200 million minority investment in Neiman Marcus Group, in a deal designed to accelerate NMG’s digital and omnichannel evolution. A first step is underway whereby Farfetch has begun re-platforming the BG website, using its technology to update and expand the New York retailer’s global reach. Van Raemdonck told WWD the re-platforming will be complete within the second half of 2023, enabling the website to be shopped in certain foreign languages and different currencies.
The Neiman Marcus Group is privately held by Davidson Kempner Capital Management, Sixth Street Partners and Pacific Investment Management Co. Eventually, the group of owners will want to cash in on their investment, possibly through a public offering of NMG or a sale to another retailer, or to private equity
While far from the scale of the thousands of layoffs in the tech sector, it’s clear that retailers are looking to recalibrate and manage costs to be more in line with softening revenues. Consumers are spending less on merchandise, Christmas sales were below expectations, and the first half outlook for retail sales are weak. There is also the possibility of the U.S. entering a recession this year, though in the last couple of weeks some economists have suggested that a recession seems less likely.
“Many do have to reshape and rebalance to manage for what is coming, and for growth in the future. Those are not easy decisions,” David Bassuk, global leader of the retail practice at AlixPartners, a leading retail consulting firm, told WWD in a recent interview.
In November, AlixPartners surveyed 300 senior retail executives, including many chief executive officers, to gauge workforce plans. A key finding was that over the next 12 months, 20 percent of the retailers are expecting to trigger layoffs. The survey also revealed that 14 percent of the retailers will issue furloughs; 19 percent said they would slow hiring; 37 percent said they would slow raises or promotions, and 22 percent indicated reducing wages.