The Neiman Marcus Group eliminated 500 jobs on Thursday in a reduction of the luxury retailer’s workforce affecting all stores, divisions and facilities.
The cutback brings NMG’s headcount to 15,500.
“A key part of this is about reinvestment back into the business,” Karen Katz, president and chief executive officer of the Dallas-based NMG, told WWD.
“Essentially, we did our strategic plan a number of months ago called NMG 2020,” Katz added. “One of the initiatives is called ‘organizing for growth,’ which is about improving ways to run our business to allow us to accelerate investments in customer-facing initiatives.”
The Neiman’s cuts follow those made earlier this week by Hudson’s Bay Co. The Toronto-based operator of Saks Fifth Avenue, Lord & Taylor and Hudson’s Bay department stores, said it would cut 265 non-customer facing positions across the company to save $75 million on an annualized basis beginning in 2016, while forming three centralized centers for customer relationship management, creative and human resource functions.
At NMG, recent investments include last year’s acquisition of Mytheresa, the Munich-based luxury Web site and store that gives NMG entry into Europe. Katz said “there is a possibility” of additional acquisitions, but she did not specify what kind would be most likely.
NMG is also making capital investments in store renovations and launching three new full-line Neiman Marcus stores. The first will open in the Roosevelt Field Mall in Garden City, Long Island, in February. It will be followed by a unit at the Clearfork development in Fort Worth, Tex., in 2017, and Neiman’s first New York City store in Hudson Yards, in 2018. Hudson Yards is being developed on the west side of Manhattan. Neiman’s currently has 41 full-line stores and operates in most markets where there is a high-income clientele with an appetite for luxury goods, giving it few additional possibilities for full-line stores.
NMG has been investing in modernizing and reorganizing the Bergdorf Goodman women’s store on Fifth Avenue and considers e-commerce and the Last Call outlet business as growth opportunities as well.
There’s also an “intense focus” on mobile shopping and personalization, Katz said. “We are taking what we have been known for in terms of developing relationships with customers and taking it to a new place.”
The ceo said no senior positions or sales associates were part of Thursday’s job force reduction. She said the cuts focused on corporate offices and making back-office functions more efficient. “Our number one focus remains on the customer and taking care of them,” Katz said. “Even as we adjust our course, our mission is unchanged. Every employee of Neiman Marcus Group has a single focus: our customer.”
Neiman’s would not comment on how much money the company will save through Thursday’s cutback. The retailer has not made job cuts since the beginning of the Great Recession.
Katz declined comment on Neiman’s plans for an initial public offering, though sources this week said it’s been put on hold amid the still-shaky stock market and that an IPO is unlikely this year. The workforce reduction could pump up Neiman’s profitability, elevating the chances for an IPO or for a sale of the company outright.
The retailer filed its paperwork for an IPO on Aug. 4. Companies have to wait 21 business days before they can start pitching to investors in presentations known as a road show. Retailers often aim to come to market in the window between Labor Day and Thanksgiving, between the summer lull and the holiday rush.
Since Neiman’s filed its intent for an IPO, the Dow Jones Industrial Average has fallen more than 1,500 points, or more than 8 percent, to trade near 16,000.
Neiman’s has given no indication of when it would launch the IPO, or how many shares would be offered and at what price.
Ares Management and the Canadian Pension Plan Investment Board purchased NMG from TPG and Warburg Pincus two years ago for $6 billion.
NMG last week reported that for the fiscal year ended Aug. 1, adjusted earnings before interest, taxes, depreciation and amortization rose to $710.6 million compared with $698.4 million the year before. Net earnings were $14.9 million, compared to a net loss of $147.2 million in the prior year. Total revenues rose to $5.1 billion, a 5.3 percent increase, compared to $4.84 billion from the year before. Comparable revenues increased 3.9 percent.
Neiman’s reported higher capital expenditures of $270.5 million in the latest fiscal year, versus $174 million in the year-ago period. Interest expense was $289.9 million versus $270 million a year ago.