Shoppers walk by a Neiman Marcus department store on Black Friday in Miami, . Stores open their doors Friday for what is still one of the busiest days of the year, even as the start of the holiday season edges ever earlierHoliday Shopping Black Friday, Miami, USA - 25 Nov 2016

Neiman Marcus Group, furthering its four-year “transformation” plan, is streamlining to sharpen the focus on full-price selling and raise profitability.

NMG will close most of its 22 Last Call clearance outlets and in the process let go approximately 500 Last Call workers over the next eight months.

Some workers could be reassigned within the company; others will be eligible for severance and outplacement services and can apply for open positions. Neiman’s will no longer buy products specifically for Last Call and will stock the remaining Last Call units only with clearance merchandise shipped from Neiman Marcus and Bergdorf Goodman stores.

Another 250 associates or so at Neiman’s department stores, mostly nonselling, will be let go, though the company said some new roles will be created for team and client development. NMG has 13,700 corporate and store associates.

“This is not a workforce reduction. This is not a reaction to anything happening in the economy now. It’s a strategic decision to redeploy resources,” Geoffroy van Raemdonck, chief executive officer of the Neiman Marcus Group, told WWD.

In addition, NMG has set up a process to sell two distribution centers, in Longview and Las Colinas, Tex. The potential proceeds, van Raemdonck said, will be used to strengthen the supply chain with new technology and equipment resulting in an average four to five-day speed-to-market improvement. The Dallas-based NMG also has distribution centers in Pittston, Pa.; Whittier, Calif., and a third in Pinnacle Park in the Dallas area.

In an exclusive interview, van Raemdonck said the streamlining will enable the company to allocate greater resources to the Neiman Marcus and Bergdorf Goodman divisions. NMG, critics have said, has lacked enough resources to adequately fund improvements and modernizations due to the costs of servicing its more than $4 billion in long-term debt and the difficult business climate, particularly in women’s fashion.

However, van Raemdonck, who initiated the four-year plan in August 2018 seeking to transform NMG into “a preeminent luxury customer platform,” told WWD, “We are constantly looking at redeploying our resources toward the luxury customer buying full-price. We are well on track with our plan.”

He said Last Call “no longer fits in the overall strategy. It can be smaller, though it has never really been big. We are focusing on full-price selling to luxury customers to drive sustainable, profitable growth.”

Going forward, van Raemdonck expects less “residual” products at Neiman’s and Bergdorf’s, meaning those unsold at the end of each season and destined to Last Call for clearance. “We are very focused on full-price selling,” van Raemdonck said. “Over the last couple of quarters, we have improved the margin rate and reduced the amount of promotions we participate in. We look to Neiman Marcus and Bergdorf Goodman to be even more involved in full-price selling.”

NMG, which generates $5 billion in annual volume through its 43 Neiman’s stores, two Bergdorf’s stores, neimanmarcus.com, bergdorfgoodman.com, the Mytheresa luxury web site, the Horchow direct-to-consumer business and Last Call, isn’t the only retailer to streamline. Earlier this year, Macy’s Inc. said it would close 125 stores over three years and consolidate corporate offices, and HBC, sources said, is expected to make some cutbacks soon.

Van Raemdonck said it was too soon to tell how many of the 500 Last Call associates will get new jobs. “There is a high level of confidence at corporate that we can reallocate many of those people.”

Van Raemdonck’s transformation strategy also entails recasting sales associates in stores and online stylists into “trusted client advisers” trained to shop with customers across channels and categories, participate in services like wardrobing or organizing customers’ closets, and follow up with customers, post-transaction. Associates are being equipped with handheld devices storing greater data on customers and their purchases, and enabling easier communications with customers like exchanging photos, booking appointments and sending notifications on style arrivals and events. The NM Connect app has been in test mode since January with digital stylists, and will be rolled out to associates in all stores beginning late March through the end of the year. According to van Raemdonck, it’s about clienteling in a way that transcends transactions and develops tighter connections to customers. “To do this, we need to equip our sales associates with better tools,” he said.

Roles at the regional level are also evolving so managers are involved in customer journeys online and in stores, transcending a single product transaction. “Whether through dining experiences, client services, hospitality, or wardrobing customer lifestyle moments, each touch point in the customer journey is another opportunity to deepen and personalize customer relationships,” van Raemdonck said.

To further make experiences “seamless,” channel to channel, David Goubert is expanding his role as chief retail officer. Previously, he oversaw store teams. Now he’s overseeing store and online teams. “Bringing our stores and online teams together and equipping them with the best leadership, tools and support, positions us to deliver on our commitment to building long-term, deep customer relationships,” said Goubert.

With some reassignment of managers to “value-added roles taking the customer journey beyond the transaction,” and some new manager hires, there shouldn’t be a net loss of 250 jobs at Neiman Marcus stores, van Raemdonck said.

Regarding how Neiman’s will adapt with two less distribution centers, van Raemdonck replied: “We are not yet announcing what our next steps will be, but we are committed to reinvesting in equipment that helps us ship faster, and in IT systems.” He said there won’t be any disruption in business. NMG does have a third Texas distribution center and could lease back the ones it sells.

The streamlinings disclosed Wednesday are “highly EBITDA-accretive and will improve our liquidity position,” van Raemdonck said. “In the short term, this will provide quite immediate savings and outweigh the onetime costs of the decisions being taken. We are not sharing what the cost savings are.”

To further cut debt and raise profitability, the company continues to explore strategic alternatives for its Mytheresa luxury web site, including a sale or an initial public offering.

Sources said recently Hudson’s Bay Co. — operator of Saks Fifth Avenue, Saks Off 5th and Hudson’s Bay — renewed its interest in buying NMG and that talks started up again. Richard Baker, executive chairman and ceo of HBC, has long been interested in combining Saks and Neiman’s, to create a dominant North American luxury retailer.

In August 2018, NMG launched its transformation strategy, which is centered on strengthening customer relationships, building seamless experiences when consumers shop across channels, and delivering new kinds of experiences and products — fashion and nonfashion — creating a multichannel luxury platform. Company executives say NMG can no longer be defined as a department store. The Dallas-based NMG is doubling down on personalization initiatives targeting those spending less than $10,000 annually at its stores and web sites and to win over new customers, while still focused on much bigger spenders. Those spending less at Neiman’s don’t get the same rewards or special attention big spenders get.

Nevertheless, focusing on luxury shoppers exhibiting relatively reserved spending is seen as crucial for improving profits. Last spring, the company formed a “personalization agile team,” called PAT for short. PAT, a kind of internal think tank, “solves a problem and focuses on getting the data,” van Raemdonck said. It devises solutions and actions to challenges posed by management and includes managers designing personalized store and web site experiences; events specialists figuring out ways to host customers; store reps training associates on reaching customers they don’t know; creatives composing all sorts of communications, like e-mails and invites to customers, as well as merchants, and most importantly, analytics experts and data scientists.

“Today is a significant milestone for NMG as the company evolves to better serve our customers, brand partners, investors and associates,” said van Raemdonck. “We are building a solid luxury customer base and taking deliberate steps today to align Neiman Marcus’ in-store and online teams, revisiting how we deploy our resources by investing in our supply chain, and streamlining Last Call.”

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