As Sales Decline Again, Neiman Marcus Explores Selling Itself

Sixth consecutive decline in comparable-store sales

March 14, 2017

Neiman Marcus, posting yet another decline in quarterly sales, said it is exploring a possible sale of the company.

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Neiman Marcus

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The luxury retailer said comparable-store sales slid 6.8% in the fiscal second quarter ended Jan. 28. It marked the sixth consecutive decline in comparable-store sales. Overall revenue declined 6.1% to $1.40 billion. The company reported a net loss of $117.1 million for the quarter, compared to net earnings of $7.9 million a year earlier. 

Neiman Marcus's struggles are a grim warning sign for the department store sector as a whole, as the company's ecommerce efforts have been considerably more successful than many others in the category.

eMarketer estimates that ecommerce sales make up nearly 30% of total sales, considerably higher than rivals like Nordstrom, Saks, Macy's and others. But ecommerce sales growth has tailed off.

Physical store sales, meanwhile, like those of most department store chains, have stumbled.

The announcement of a possible sale stuck to corporate script and was thin on details. The Wall Street Journal, citing unnamed sources, reported on that  Hudson’s Bay Co., parent of Lord & Taylor and Saks, is in talks to buy Neiman Marcus.

The majority of Neiman Marcus's outlets are leased real estate. As of Oct 29, 2016, the company operated 42 Neiman Marcus stores and 2 Bergdorf Goodman stores in 19 states, as well as 42 Neiman Marcus Last Call stores and 4 CUSP stores. All Bergdorf Goodman, Last Call and CUSP stores are leased. 

Of the 42 Neiman Marcus stores at year-end, 18 are leased, 6 are owned, 2 are owned subject to a partial ground lease and 65 are owned buildings on leased land. Neiman Marcus full-line stores average approximately 134,000 square feet, Bergdorf Goodman stores average approximately 158,000 square feet, Last Call stores average approximately 25,000 square feet and CUSP stores average approximately 7,000 square feet.

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