NMG SALES SLIP IN MARCH
Byline: Jennifer Weitzman
NEW YORK — Dramatic drops in the stock market, coinciding with a soft retail environment, had luxury shoppers tightening their pursestrings in March as Neiman Marcus Group reported its comparable-store sales fell 4.7 percent for the five-week period ended March 31.
The company, which operates Neiman Marcus and Bergdorf Goodman stores, also said that disappointing spring sales should result in its fiscal third-quarter profits falling well south of Wall Street’s estimates. NMG said it anticipates profits to range between 80 and 85 cents, while analysts were hoping to see earnings of $1.03, according to First Call.
By division, same-store sales results fell in its specialty retail segment 7.7 percent — Neiman’s down 8.2 percent and Bergdorf 3.9 percent — as opposed to its direct-marketing division, which rose 9.5 percent. Overall, revenues for the month declined 3.6 percent to $254.8 million.
NMG said it expects comps for the third quarter to decline 1 percent to 3 percent and to be flat for the six-month spring selling season, as business gets pushed into Neiman’s fourth quarter, typically known more for its clearances and lower profits. It said it also expects earnings per share to be flat for the fiscal year.
Still, on a conference call, Burt Tansky, chief executive of the company, remained upbeat in his views about the overall state of business. “Even in this environment, our customers clearly have the financial resources to spend,” he said. “When their perception of the economic outlook improves, we expect to be perfectly positioned to resume our sales and earnings growth that distinguishes us as premier luxury retailer.”
Tansky outlined three steps to manage NMG through its bumpy time.
First, despite the difficult environment, he said the company would not change its merchandise and service strategy. “We will continue to edit our assortment and our vendor mix and we will continue to strengthen our relationship with profitable vendors and pull back on the marginal resources,” he said.
In addition, he said NMG would boost its marketing efforts and reduce expenses to offset higher fourth-quarter markdowns.
At Neiman Marcus, cosmetics and fragrance were the best performers with sales up more than 10 percent. However, results reflected the shift of the five-day beauty sale event to March from May. Otherwise, the company said it saw weakness in all major categories, even those performing relatively well until this point, Tansky said. Bergdorf Goodman saw women’s apparel, cosmetics and fine jewelry exceeded last year’s results, but its main and men’s stores posted revenue declines.
Neiman’s stock rose anyway, riding the surge in the Dow Jones Industrial Average to close at $32.15, up $1.07 or 3.4 percent.
Other retailers and apparel makers also saw a drop in their March same-store sale results.
After adjusting for calendar differences, comps at Nordstrom declined 4.3 percent. Declines were spread across all regions, but the company said that women’s and junior apparel and cosmetics had increases on a same-store basis.
Guess Inc. reported comparable-store sales decreased 16.4 percent in March as comps declined at both its full-price retail stores and factory-outlet stores, 19.5 percent and 9.3 percent, respectively.
Although the company’s financial results soared for much of 2000, the company saw profits tumble at the end, reflecting the cooling economy mixed with very high inventory levels. It wound up restating previous results as it scrambled to clear out merchandise at highly promotional prices.
As a result, the company announced in March a redesign of its core styles, but results have yet to pick up.
Dress Barn, the value-priced specialty chain, reported same-store sales were down 14 percent.
Christopher & Banks and Deb Shops were the only bright spots of the first group to report monthly sales.
Christopher & Banks, formerly Braun’s Fashions Corp, reported an 18 percent comp increase while Deb Shops enjoyed a 5.9 percent jump.
Bill Prange, chairman and chief executive of Christopher & Banks, said, “Our results demonstrate that the brand continues to gain broader acceptance among our target customers. We are pleased with the strong reception given to our merchandise assortments and we remain optimistic about our prospects for the balance of the spring selling season.”