Omnichannel aspirations evident at Neiman Marcus
Neiman Marcus reported modest sales growth and a reduced loss for its recently ended fourth quarter as the operator of 85 stores eyes an initial public stock offering and a bright omnichannel future.
Neiman Marcus said revenues at its 43 full-line department stores and 42 outlets stores branded as Last Call increased 4.9% to $1.17 billion, and 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%. Despite the sales growth, Neiman Marcus posted a net loss of $32.9 million, compared to a net loss of $42.1 million in the fourth quarter the prior year. For the full year, the company was able to generate a $14.9 million profit versus a prior year loss of $147.2 million.
The release of financial results follow the company’s Aug. 4 filing of a registration statement with the Securities and Exchange Commission. As the company prepares for an initial public stock offering, it has outlined a growth strategy that is reflective of the digital age and the company’s upscale status. Neiman Marcus is taking a different approach in selling itself to investors than other retailers who 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. For example, the company plans to invest significant capital to remodel 23 of its 43 full-line stores, including Bergdorf Goodman in New York City and four 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 designer shops and increasing the number of designer shops by approximately 20%.
As for new stores, two new locations are in development in New York: 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 the company to purchase, share, manage and sell inventory across channels more efficiently. The implementation is expected to be completed next year. Already, Neiman Marcus notes that 24% of its sales are e-commerce sales and 75% of its sales are digitally influenced.
“We are dedicated to remaining at the forefront of innovation in retail and are transforming the way customers shop for luxury goods,” according to the company’s prospectus. “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.”
For example, the company 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. The company also merged its merchandising and planning organizations for Neiman Marcus stores and Neiman Marcus 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 company is also eying cross border trade following its October 2014 acquisition of European online 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,” according to the company.