ANALYST SEES 12% GROWTH AT NM
Byline: Thomas J. Ryan
NEW YORK — Capitalizing on the expected steady spending of affluent consumers, per-share earnings of Neiman Marcus Group Inc. should grow at a 12 percent clip over the next three to five years, according to NatWest Securities Corp.
In a recent research report, Robert Buchanan, NatWest’s retail analyst, said that while consumer spending is generally expected to be hampered by further corporate downsizing and the aging of baby boomers, “consumer spending at the high end is expected to be one of the few exceptions to this rule.”
That should continue to boost earnings at the core Neiman’s chain, and lead to healthier results at Neiman Marcus’s catalog operation and at Bergdorf Goodman, Buchanan said.
“Incomes will continue to polarize in the U.S., due in part to a select group getting the most comfortable with, and thus the most proficient in, the technology that increasingly is driving economic progress,” Buchanan wrote in the report.
While there has been some movement recently toward moderate price points, the core Neiman Marcus chain “stands out among its key upscale competitors as a store that caters to upscale shoppers with markedly less of an appeal to the mass consumer population.” Its national competitors were listed as Saks Fifth Avenue, Bloomingdale’s, Nordstrom and Lord & Taylor.
Neiman Marcus’s net earnings should reach $1.15 a share in its year ending July 1996, up from $1.01 from continuing operations the prior year. For the year ending July 1997, Buchanan expects Neiman’s to earn $1.34. Same-store sales should grow 3 to 4 percent, assuming above-average growth in high-end spending.
The core Neiman Marcus chain should benefit from aggressive store renovation, “excellent” customer service and strong partnerships with its upscale vendors, Buchanan said. He noted that the chain could tap into its strong appeal to Asian customers by opening stores in Asia at some point.
He also said that while Neiman Marcus’s catalog and Bergdorf Goodman had “sub-par” results last year, they have “great potential, over time.”