Neiman Marcus Q4 loss narrows; details remodeling plans

Neiman Marcus reported modest sales and a reduced loss for fourth quarter as it eyes an initial public stock offering and a bright omnichannel future.



Neiman Marcus posted a net loss of $32.9 million for the fourth quarter, compared to a net loss of $42.1 million in the year ago period.



Revenues at the company’s 43 full-line department stores and 42 Last Call off-price stores increased 4.9% to $1.17 billion. Same-store sales increased 1.9% for the fourth quarter ended Aug. 1.



Full year revenues increased 5.3% to $5.1 billion and same-store sales increased 3.9%. The company generated a $14.9 million profit for the year, versus a prior year loss of $147.2 million.



The release of financial results follow Neiman Marcus’ Aug. 4 filing of a registration statement with the Securities and Exchange Commission. As the retailer prepares for an initial public stock offering, it has outlined a growth strategy that is reflective of the digital age and its upscale status.



In selling itself to investors, most retailers tout their physical expansion potential and oftentimes will specify the number of stores they believe the market will support to provide visibility into the company’s growth potential.



Not Neiman Marcus. That is due in large part to the upscale positioning of the brand which naturally limits suitable locations. An abundance of stores would diminish the exclusivity of a retail brand where 38% of the customers have a median household income greater than $200,000.



As a result, Neiman Marcus is more focused on improving the experience at existing stores and selectively opening domestic locations while alluding to the potential for international expansion.



It plans to invest significant capital to remodel 23 of its 43 full-line stores, including Bergdorf Goodman in New York City and Neiman Marcus stores in Beverly Hills, Boston, Houston and Palo Alto. Next year, the company said it is considering remodeling approximately 7% of its more than 850 in-store designer shops and increasing the number of the shops by approximately 20%.



As for new stores, two new locations are in development in the New York City metro area, a 100,000-sq.-ft store at Roosevelt Field Mall on Long Island, and a massive 250,000-sq.-ft. flagship location at the 28-acre Hudson Yards development on Manhattan’s West Side.



The Roosevelt Field store is due to open next year but the Hudson Yard location won’t open until 2019.



The growth strategy at Neiman Marcus is all about omnichannel. The company touts the implementation of an Oracle-based merchandising system dubbed NMG One that will enable it to purchase, share, manage and sell inventory across channels more efficiently. The implementation is expected to be completed next year. Already, Neiman Marcus notes, 24% of its sales are e-commerce sales and 75% of its sales are digitally influenced.



“We have made significant investments to address the dynamic and evolving ways in which customers interact with retailers and to realign our business to support our omnichannel approach,” according to the company’s prospectus.



For example, the retailer shifted organizations under the Neiman Marcus brand so that both stores and online report to a president of Neiman Marcus Stores and online who is responsible for the total customer experience. It also merged its merchandising and planning organizations for Neiman Marcus stores and online into one team under its president and chief merchandising officer.



“These initiatives have enabled us to better coordinate our in-store and online marketing campaigns, merchandise assortments, creative resources, promotional calendars and delivery, pick-up and return processes,” according to the company.



The retailer is also eying cross border trade following its October 2014 acquisition of European online fashion retailer MyTheresa. As a result of that deal, Neiman Marcus contends it is “the only omnichannel multi-branded luxury fashion retailer with a global platform.” The company plans to use MyTheresa platform to grow its Neiman Marcus and Bergdorf Goodman revenues internationally.



“MyTheresa's fulfillment capabilities provide us with the infrastructure to source and distribute Neiman Marcus Group merchandise directly in Europe, which gives us a distinct logistical advantage over many of our U.S.-based competitors,” the company stated.