The Neiman Marcus Group has developed an agenda of ESG investments and goals revolving around reducing emissions, eliminating products with fur, increasing the sale and awareness of sustainable products and furthering diversity and equity within its ranks.
The program and its goals are spelled out in the luxury retailer’s first environmental social governance report, titled “Our Journey to Revolutionize Impact,” issued Wednesday.
“As a leader in luxury retail, ESG is an essential part of our growth roadmap,” said Geoffroy van Raemdonck, chief executive officer of the Neiman Marcus Group.
Among NMG’s goals:
- Reduce Scope 1 and Scope 2 emissions 50 percent from a 2019 baseline by 2025, and perform a Scope 3 assessment in 2022 to understand the company’s position and chart a path toward a net zero goal. Scope 1, 2 and 3 refer to greenhouse gas emissions stemming from the activities of a company, and “upstream and downstream” activities including a company’s suppliers and the transport and disposal of goods.
- Procure 100 percent renewable energy by 2030 across the business and join RE100, the global initiative by businesses committed to achieving 100 percent renewable electricity.
- Eliminate all products containing fur listed in NMG’s Animal Welfare Policy by 2023.
- Increase revenue from the sale of sustainable and ethical products by 2025 by launching two sustainability edits at Neiman Marcus and Bergdorf Goodman that identify categories within sustainable and ethical fashion.
- Extend the useful life of over 1 million luxury items through circular services such as mending and alterations, restoration, resale and donation by 2025, building on the 350,000 products addressed in FY21.
- Extending Neiman’s network of 10 in-store Fashionphile selling studios which authenticate and take in luxury products from customers, to every Neiman Marcus store.
Also on Wednesday, NMG selectively disclosed some highlights of its fiscal second quarter, which extended from November 2021 through January 2022, citing “strong full-price selling, significant gross margin expansion and high single-digit comparable sales growth.”
NMG, which operates the Neiman Marcus and Bergdorf Goodman stores and websites, cited adjusted EBITDA growth of 15 percent for the quarter compared to the same holiday period pre-COVID-19. Adjusted EBITDA for the 12 months ending January 2022 increased 26 percent compared to the pre-COVID-19 period ended January 2020.
However, NMG did not disclose any actual dollar figures for the top or bottom lines.
“We are very pleased with our strong holiday performance and second-quarter results,” van Raemdonck said. “We delivered healthy topline growth and significant margin expansion relative to the comparable pre-pandemic period. The strong growth we have continued to experience is a testament to our differentiated luxury business model, focus on a full-price strategy, and the ability and agility of our teams to continue to execute well while navigating a dynamic macro environment. NMG is a relationship business. Our brand partners continue to trust NMG because of our relationships with luxury customers, and customers know that we’ve curated an extraordinary assortment of the most desirable brands.”
NMG also reported current liquidity of $1.2 billion, versus $458 million a year ago, and has no borrowings outstanding on a $900 million revolver.
NMG emerged from five months of bankruptcy in September 2020 through a debt-for-equity deal with its new owners, enabling the company to eliminate more than $4 billion of debt and significant annual cash interest payments stemming from the debt, ranging from $200 million to over $300 million. The new owners are Pimco, Davidson Kempner Capital Management, and Sixth Street.
For its ESG strategy, NMG said it analyzed data from multiple sources, including ESG ratings and rankings, research reports from industry media outlets and trade associations, disclosures from NMG’s best-in-class peers, ESG reporting frameworks like Global Reporting Initiative and Sustainability Accounting Standards Board, etc. to inform its strategy.
“We are proud that our first report aligns with external frameworks from SASB, GRI, and TCFD and provides investors with comparable and decision-useful information about the company’s ESG performance,” said Pamela Edwards, an NMG board member and chairperson of the audit committee. “It is our hope this will help investors and other key stakeholders share the board’s confidence in the strength of this company and its future as we seek to hold ourselves to public company standards while moving with the speed and agility of a private company.”
NMG officials characterize the company as outpacing the industry in terms of inclusivity and diversity. Its CEO is openly gay, and the majority of the board members are women, compared to the 26.7 percent industry standard, according to the 50/50 Women on Boards Gender Diversity Index.
In addition, women at NMG make up 59 percent of the vice president level and above, and 68 percent of all corporate and store associates. The company was founded by Carrie Marcus Neiman.
The board’s audit committee members completed training on ESG oversight with Ceres and UC Berkeley School of Law. They reviewed the company’s ESG impacts, risks and opportunities, as well as the work of the newly developed ESG Steering Committee.
On the social and governance front, NMG listed the following goals:
- Increase racial diversity at the vice president level and above to 21 percent by 2025 and 28 percent by 2030. NMG is partnering with McKinsey’s Connected Leaders Academy, Prospanica, and Fashion Scholarship Fund to develop and attract BIPOC talent.
- Advance workplace equity, invest in a pay equity study this year, and introduce 16 weeks of paid parental leave to cover associates’ child bonding, adoption and surrogacy needs.
- Support women-founded fashion tech companies like Fashionphile and Stylyze. In 2019, NMG bought a minority stake in Fashionphile which specializes in the buying and selling of used luxury handbags, jewelry and accessories. Last year, NMG purchased outright Stylyze, a machine learning SaaS platform for personalization.
- Increase spending with diverse retail and non-retail suppliers.
- Partner with customers to raise $3 million for charity through The Heart of Neiman Marcus Foundation.
- Increase associate giving and volunteerism.
- Support disaster preparedness and relief “to keep store communities thriving.”
“NMG’s first-ever ESG Report is an opportunity for us to demonstrate the true impact Neiman’s has had on the lives of our customers, associates, brand partners, and the communities in which we do business,” said Eric Severson, chief people and belonging officer, Neiman Marcus Group.