Neiman Marcus Sees Gross sales Dip, Warns of Cautious Shoppers – WWD

Neiman Marcus Group, confronting a unstable macro financial system and more and more cautious shoppers, noticed a dip in each revenues and profitability in its first fiscal quarter which ended Oct.28.

Adjusted earnings earlier than curiosity, taxes, depreciation and amortization, eased to $95 million within the newest three-month interval, versus $112 million within the prior-year interval, the corporate disclosed to WWD on Wednesday.

The posh retailer, operator of Neiman Marcus and Bergdorf Goodman shops and e-commerce web sites, additionally reported $948 million in gross sales for its final fiscal quarter, in comparison with $1.034 billion within the prior yr. Identical-store gross sales fell 8 % final quarter.

The corporate ended the quarter with $35 million of money, versus $194 million within the prior-year interval. “The decline in money has to do with working capital wants,” NMG stated in a press release. “The decline was additionally associated to deliberate investments within the firm’s multiyear capital technique in addition to strategic initiatives.” That would come with such prices as retailer enhancements, digital and know-how upgrades.

The corporate had round $880 million of liquidity, together with money, bank card receivables and revolver availability. 

Web leverage, or web debt to EBITDA, jumped to round 4.8 occasions, versus 2 occasions, year-over-year.

“There may be slowdown in comparison with final yr however we proceed to have a really worthwhile enterprise, with a double-digit EBITDA charge,” Geoffroy van Raemdonck, chief govt officer of the Neiman Marcus Group, advised WWD.

“We even have a wholesome place by way of stock which is right down to final yr, meaningfully, and we’re getting the products earlier,” he stated.

Whereas NMG’s luxurious enterprise has softened considerably, van Raemdonck famous, “We proceed to be very sturdy in footwear and jewellery, which have been sturdy and regular for a number of quarters, and we noticed power in magnificence this quarter as nicely.”

Van Raemdonck additionally stated the best-performing luxurious manufacturers “are those on the quiet luxurious facet, the manufacturers which are much less brand pushed.”

NMG doesn’t count on this upcoming Black Friday weekend to provide an immense change within the enterprise, partially as a result of the shop’s luxurious prospects are much less inclined to hit the shops when there’s an enormous rush to buy and retailers blitz the market with value selling.

Van Raemdonck stated NMG “continues to navigate a unstable macro atmosphere, cautious prospects and elevated promotionally within the luxurious sector. What’s completely different on this quarter is that we’re seeing the engaged buyer slowing down as nicely, although there’s some resilience amongst our highest spending prospects.”

Different luxurious companies together with Kering and Saks Fifth Avenue have additionally encountered softening demand, and LVMH just lately reported gross sales will increase that didn’t meet expectations. Others have cited a “normalization” in luxurious spending after a spree occurred proper after the pandemic.

In his ready assertion, van Raemdonck stated, “This fall, we started seeing a broader demand deceleration with comparatively constant traits throughout all areas of the enterprise. We stay dedicated to our technique and are taking deliberate actions to drive buyer engagement. Our sturdy liquidity place affords us a comparative benefit within the present setting, and we proceed to strategically spend money on our provide chain, shops, digital platforms and different areas that drive a differentiated buyer expertise throughout our built-in retail mannequin.”

The CEO additionally cited “considerably improved expense administration and stock place during the last 12 months,” including, “We’re proactively addressing the headwinds we face by decreasing controllable prices and focusing our investments on our development and core methods to make sure the long-term success of the group.

“Our core buyer is loyal. We have now fostered sturdy relationships, creating lasting connections with prospects. We stay dedicated to our technique of leaning into relationships, with our 3,300-plus gross sales associates partaking with our prospects each in retailer and through distant promoting.”

He stated that in NMG’s first quarter, greater than 20 % of web gross sales have been both transacted by or straight influenced by gross sales associates interacting with prospects who weren’t bodily current within the shops, which was greater than in first quarter final yr. 

He additionally stated that regardless of the slowdown, the corporate continues to make strategic investments in key capabilities throughout NMG that assist the client expertise, together with $300 million since fiscal yr 2021 in know-how, provide chain and retailer renovations.

As well as, NMG has a “packed calendar stuffed with trunk reveals and activations,” van Raemdonck stated. NMG and different retailers may also be benefited by the additional purchasing day between Thanksgiving and Christmas — 32 days this yr versus 31 final yr — and since with Christmas Day touchdown on a Monday this yr, there’s a complete week simply earlier than to buy.