NM EARNINGS UP 26.1% IN QUARTER
Byline: Vicki M. Young
NEW YORK — Continued emphasis on the luxury market helped Neiman Marcus Group post double-digit increases in earnings, sales and same-store sales in the third quarter ended April 29, and company officials see no letup in momentum.
Reporting its third straight quarter of double-digit comparable store sales gains, the company said Wednesday that it is on track to end fiscal 2000 with another quarter of improved operating results.
Neiman Marcus reported a 26.1 percent earnings increase to $45.2 million, or 94 cents a share, for the quarter ended April 29 from $35.8 million, or 73 cents, for the comparable year-ago period. Sales for the quarter rose 13.5 percent to $694.3 million from $611.7 million.
Robert A. Smith, co-chief executive officer, said in a statement that the company in the quarter focused on “merchandising and promotional strategies that drove full-price selling and margin improvement across many categories. The Kate Spade and Laura Mercier brands, in which we hold majority stakes, also contributed positively to top and bottom line results in the quarter. Looking ahead, despite seasonal markdowns anticipated for the fourth quarter, we currently expect to close a record fiscal year with another quarter of improved operating results.” The firm’s fiscal 2000 ends July 31.
He noted that the firm’s “unwavering focus on the luxury market continues to be rewarded” as its business was strong in most merchandise categories and all regions of the country. “Neiman Marcus Stores, Bergdorf Goodman and Neiman Marcus Direct each performed very well in the third quarter, with double-digit comparable revenue increases and strong operating results in each business unit.”
The company disclosed that specialty retail store sales, which include Neiman Marcus Stores and Bergdorf Goodman, rose 12.6 percent to $591.4 million in the quarter from $525.1 million. “Strong regular-price selling in the quarter led to operating margins of 13.6 percent in this segment,” said Brian J. Knez, co-chief executive officer, in a statement. He added, “Our leadership in fine apparel drives sales of highly profitable, complementary goods such as shoes, leather and fashion accessories, and jewelry, all of which grew at 15 percent or more in the quarter.”
For the quarter, total sales at the Neiman Marcus Stores rose 11.1 percent, with comparable store sales up 10.9 percent. Sales at Bergdorf’s increased 24.7 percent, following the completion of the first phase of a major remodeling project at the main store, the company said.
According to a spokeswoman, 11 of 26 merchandise categories showed double-digit sales gains in the third quarter. “We had 20-plus percent growth in fine apparel, designer jewelry, fashion accessories and leather, and 15 percent growth in precious jewelry. We also had 50 percent growth in men’s shoes in the high-end casual designer product, such as Prada, which was blowing out of our stores.”
Over at Neiman Marcus Direct, sales for the third quarter increased 14.2 percent to $85.2 million, while operating earnings leapt 44.4 percent to $7.1 million. Knez noted, “Earnings at Neiman Marcus Direct continued to benefit from stronger revenues, improved gross margins and increased catalog productivity.” A spokeswoman said that the Neiman Marcus Direct division includes the Neiman Marcus catalog, Chef’s catalog and sales from Chef’s online site.
The company’s e-commerce revenues are reported in a separate category that includes brand development initiatives such as Kate Spade and Laura Mercier. Results for the quarter were not provided by the company, but the business represents a tiny fraction of the firm’s total revenue. For fiscal year 1999, which ended July 31, sales for the specialty store segment reached $2.2 billion, $322 million for Neiman Marcus Direct and just $22 million for the e-commerce and brand development sector.
The spokeswoman noted that the beauty shop at the neimanmarcus.com site, launched May 15, has been “well received.” The shop includes 60 vendor boutiques of narrowly distributed brands. The Neiman Marcus site itself has about 2500 items, and the company is planning to relaunch the site in September with a number of new features, she said.
For the nine months ended April 29, earnings were up 33.8 percent to $123.9 million, or $2.53 a diluted share, compared with $92.6 million, or $1.88, in the prior-year period. Sales rose 13.8 percent to $2.26 billion from $1.99 billion.