Home > Uncategorized > Neiman Marcus profits plummet 81% on slow apparel sales

Neiman Marcus profits plummet 81% on slow apparel sales

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By | June 15, 2016

Dive Brief:

  • Upscale department store Neiman Marcus said Tuesdaythat same-store sales fell 5% in its fiscal third quarter, the company’s third straight quarter of declines.
  • Neiman Marcus’ Q3 net income fell 81% to $3.8 million, compared to $19.8 million in the year-ago quarter. Adjusted EBITDA was $173.2 million, compared to $202.6 million in fiscal Q3 2015.
  • For the period ended April 30, Neiman Marcus reported total revenues of $3.82 billion, down 2.7% from $3.93 billion a year ago. In that time, same-store sales fell 4.2% and the company reported net earnings of $1.1 million, compared to net earnings of $47.8 million in the prior year.

Dive Insight:

In order to decrease pressure for promotions, Neiman Marcus says will re-evaluate its inventory and focus on cutting costs, according to Luxury Daily’s report on the company’s conference call with investors. Neiman Marcus is also facing the fact that e-commerce sales, which are growing as brick-and-mortar store traffic declines, present slimmer margins.

Department store retailers in general including Neiman Marcus have given mostly the same excuses for their unfavorable quarters: Unseasonably warm weather in the winter, unseasonably cool weather in the spring, and a strong dollar that has muted sales from international tourists. But on Tuesday Neiman Marcus CEO Karen Katz also blamed the retailer’s woes on the uncertainty presented by the U.S. presidential election season.

“While it is difficult to pinpoint the specific reasons why, our sense is that the overall economic outlook combined with uncertainty related to the continued fluctuations of the U.S. stock market and the upcoming presidential elections are tempering our customers’ overall enthusiasm for shopping,” Katz said, according to the Wall Street Journal.

Neiman Marcus filed for an initial public offering last year, but pulled back amid a bleak outlook for luxury retail. Its results in recent quarters mean that a second IPO attempt is unlikely.

Neiman Marcus must also replace Chief Marketing Officer Wanda Gierhart, who announced her imminent departure in March. Gierhart, who had directed all marketing functions for Neiman Marcus Group’s Neiman Marcus, Neiman Marcus Direct and Bergdorf Goodman brands since 2009, spearheaded new omnichannel initiatives such as free shipping and returns for online orders, as well as the chain’s Snap.Find.Shop. visual search app. She also brainstormed creative strategies designed to bring in younger shoppers, like event installations at conferences such as South by Southwest.

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