NEIMAN MARCUS GROUP’S QUARTER NET JUMPS 23.4%
Byline: Jennifer Brady
NEW YORK — Beating Wall Street estimates and its own, the Neiman Marcus Group Inc. said Monday that first-quarter profits rose 23.4 percent to $30.9 million and were powered by the Neiman’s and NM Direct divisions.
The results for the quarter ended Nov. 2 were calculated before a $22.4 million charge for early redemption of all outstanding preferred shares and preferred dividends. In the year-ago period, before preferred dividends, Neiman’s earned $25 million.
Robert J. Tarr Jr., president and chief executive officer, said in a conference call that earnings and sales were above expectations and driven by a strong performance at Neiman Marcus, where same-store sales climbed 7.7 percent. Sales at NM Direct moved up 8 percent.
Tarr said the only weak spot was the fifth floor of Bergdorf Goodman’s women’s store. The floor is in transition, moving from an item-driven business to an emphasis on contemporary collections such as Isaac by Isaac Mizrahi, Tocca, Ralph and Joseph. Same-store sales on the floor were “marginally negative” in the quarter, but business has begun to improve, Tarr said. The floor accounts for 5 to 6 percent of sales at Bergdorf’s main store, Tarr said. Accessories were previously considered underdeveloped on the floor, but, along with shoes, are being intensified.
Overall, Bergdorf’s earnings were higher than in the year-ago period, aided by better margins and strong expense controls, but sales were flat. “Although Bergdorf Goodman Men had a double-digit revenue gain, the main store’s revenues declined from a year earlier,” Tarr said.
Tarr noted the renovation of the men’s store is expected to be completed early next week. Thus far, Tarr said, the store is “meeting expectations. We are very excited about it.”
The corporation said that before the special items, earnings available to common shareholders were 62 cents, surpassing Wall Street estimates of 57 cents.
After the charge and $6.2 million in preferred dividends, net income was $2.3 million in the latest quarter. In the year-ago period, after $7.3 million in preferred dividends, net income was $17.8 million, or 47 cents a share.
Sales in the quarter rose 11.1 percent to $544.1 million from $489.9 million, driven by a 6.8 percent same-store sales gain and contributions from Neiman’s stores in King of Prussia, Pa., and Paramus, N.J., that opened this year.
“Operating earnings also increased significantly, despite softness in some women’s apparel catalogs that kept the sales gain below our expectations,” Tarr said in a statement.
Total NMG inventories were up 11.9 percent to $533.9 million from $477.1 million a year ago.
Tarr said the strong sales trend has continued into the first week of November and he expects it to run the entire month. He added that NMG is “optimistic” about the holiday quarter and does not expect to see as many markdowns as last year.
Selling, general and administrative expenses declined to 24.1 percent of sales from 24.3 percent. Reacting to the strong report, Kimberly Walin, analyst at Furman Selz, raised her estimate for fiscal 1997 by 5 cents to $1.80 compared with $1.26 in fiscal 1996. She called the quarter “excellent,” adding that the company had “great operating leverage, considering an already high level of sales activity.”
Neiman’s stock closed down 1/2 to 31 7/8 Monday on the New York Stock Exchange.