Neiman Marcus group cites rebound in sales – WWD
The Neiman Marcus Group says it sees a “rebound” in business, which is expressed to stakeholders in a confidential report with preliminary results for the fiscal third quarter, WWD has learned.
The report, released today on Neiman’s online portal that only homeowners and lenders can access, shows more than $ 850 million in total cash for the quarter ended May 1. 44% gain in the third quarter from the period 2020, and a decrease of 6-7% from the third quarter of 2019. Profit information will be provided in a separate confidential report to be released on June 15.
While Neiman’s does not yet reach the levels of 2019 and has only a few months of positive results to its credit, Geoffroy van Raemdonck, CEO of the Neiman Marcus group, said in an interview: rebound in our activity, which we gives confidence for the future. If you look at our liquidity at the end of the third quarter, it’s much higher than in the past. We have sufficient liquidity to stimulate our growth. “
The report says total liquidity is expected to increase to around $ 856 million, or unallocated cash of $ 297 million and gun availability of $ 559 million, an improvement of about $ 724 million from the same period a year ago. Compared to the third quarter of fiscal 2019, the improvement in total liquidity is over $ 320 million.
The Neiman Marcus Group emerged from bankruptcy on September 25, 2020 with its main lenders – Pacific Investment Management Company LLC, called PIMCO, Davidson Kempner Capital Management LP and Sixth Street Partners LLC – swapping debt for equity and becoming the new owners . The reorganization plan wiped out $ 4.4 billion in debt Neiman had on his books at the time, and about $ 200 million to $ 300 million in annual interest payments. There’s about $ 1 billion in debt on the books and the new capital structure brings annual interest costs down to about $ 80 million a year, van Raemdonck said, putting the Dallas-based luxury firm in position to build “a really strong business”. He also reported that Neiman’s $ 900 million asset-backed loan, led by Bank of America and a consortium of commercial banks, was not being used and the company had reduced its cost of capital through restructuring. .
Van Raemdonck, a former Ralph Lauren and Louis Vuitton executive who became CEO of NMG in February 2018, insisted that Neiman’s debt burden was what drove the company to bankruptcy last year. and that the underlying business has always been healthy. But the Dallas-based luxury omnichannel business has been hampered by speculation about waning support from some vendors to curb wholesale distribution, shift to franchise business models, and outperform competitors, putting Neiman and van Raemdonck under constant control. The third quarter report calls into question some of the months of speculation about the state of affairs.
Gucci President and CEO Marco Bizzarri said his company has been gradually streamlining distribution since March 2020 in order to better control brand equity and improve exclusivity last week. He said the company has reduced the number of doors it sells at Neiman Marcus as well as Saks Fifth Avenue, Bloomingdale’s and Nordstrom.
“Gucci has a comprehensive strategy that applies to everyone. We pivot with new ideas, ”van Raemdonck told WWD. He said that Neiman’s also had new ideas with other designer brands like Louis Vuitton, and that overall the distribution with Neiman’s top 50 brands overall is higher this year than there was. is two years old, and will increase again next year.
To encourage business with suppliers as well as buyers, van Raemdonck said: “The investments we are making in stores are going to be substantial, including over $ 100 million from developers and cash. additional generated by our company. ” He declined to give further details on the renovation plans, although WWD previously reported that Neiman’s plans to renovate eight stores, including those at the Bal Harbor Shops in Miami and the Tysons Galleria in McLean, Virginia. Neiman’s has also invested in upgrading online service, content, website navigation features and new technologies.
Neiman is not the only one seeing positive results this spring. Industry-wide gains would be expected as retailers emerge from the sharp declines of last year with the onset of the pandemic and the resulting temporary store closures, social distancing and restrictions on trip.
Neiman’s business was further affected by the severe snowstorm that hit Texas in late February. “Texas has never seen anything like this. There was no heating or electricity for a week [in certain parts of the state]Said van Raemdonck. “The distribution centers were inoperative for almost a week. We were unable to ship or confirm orders online and receive shipments, and stores in Texas closed for half a week to a week. The biggest impact has been the inability to ship online. The salespeople worked around the clock to adapt to the situation. They helped repair water damage in stores and some even helped refill generators that ran out of fuel. “A lot of our people were without power and without electricity, but everyone basically contributed and took on the role required.”
After the difficulties of February, March and April saw “a significant rebound,” said van Raemdonck. While business was sluggish in New York and on the West Coast where strict COVID-19 related restrictions on operations remained, “the rest of the country was positive at mid-digit and some areas were in double-digits,” said van Raemdonck. “It gives you a sense of how strong the business is when you don’t have really tight restrictions.” Neiman’s business in the southeast, where restrictions were more relaxed, were the best, he said.
Last quarter, according to van Raemdonck, NMG saw double-digit growth in men’s bags, handbags and footwear. He said women’s clothing “is improving dramatically but still negative.”
Citing some trends, van Raemdonck said see now, buy now and novelty selling, and the company is working with brands to support that with more frequent merchandise drops. While women are generally still gentle, “We have seen a change in contemporary women, bridal and swimming. These are good examples showing signs of recovery and return to normal life, ”including planning weddings and vacations. “We sold more shorts in February of this year than in June of last year.” The rise of contemporary women reflects women who are beginning to go out and socialize. He also said that in men’s clothing, sneakers and designers are strong, and much of the men’s business comes from younger customers. “There is a real new market out there with new customers,” said van Raemdonck.
The CEO sees “a real desire for luxury and we are capturing more of that demand.… We finished the second quarter and entered the third quarter with much less inventory than in previous years. We bought spring products down 20%. Selling at full price is on the rise ”, which favors margins and delays markdowns. “We moved the markdowns later, four to six weeks. Historically, we would have May markdowns. We moved them in June and July. We promote full price and it works, ”said van Raemdonck.
On the negative side: “Tourism continues to be really non-existent, especially international tourism,” said van Raemdonck. “We are seeing a little more domestic tourism and people are buying in their area of primary residence. We have seen a real recovery in local stores ”, as opposed to stores located in entry or tourist-oriented towns. “We also continue to see strong digital sales from out-of-state customers,” added van Raemdonck. Stores in California, Florida and New York normally cater for a large number of international travelers.
Neiman’s recently closed six stores permanently, including five during bankruptcy, leaving 37 Neiman Marcus stores, two Bergdorf Goodman stores and five Last Call units still in operation. When asked if further shutdowns would occur, van Raemdonck replied: “We think this is the right size of the network. All the closures were in markets where we had multiple stores. While no further closings are planned, stores are regularly screened for their future potential.
While Neiman’s presents a clearer picture, it needs to significantly support revenue gains to manage its remaining debt and maintain strong supplier relationships.
According to a recent confidential offer memorandum, for its most recent fiscal year ended August 1, 2020, when Neiman, like many other retailers, was deeply affected by the pandemic, the company lost $ 2.47 billion, up from $ 531 billion. , $ 7 million in the previous fiscal year. Adjusted earnings before interest, taxes, depreciation and amortization amounted to $ 51.2 million for the year ended August 1, compared to $ 436.3 million for the previous year.
For the six months ended, on January 30, 2021, Neiman earned $ 1.83 billion compared to a loss of $ 194.4 million the previous year. Adjusted EBITDA was $ 84.7 million compared to $ 257.1 million for the same period last year.
In the 12 months to January 2021, Neiman lost $ 446.6 million. The adjusted loss was $ 121.2 million.
NMG’s total revenue for its last fiscal year was $ 3.65 billion, up from $ 4.66 billion the year before. For the 12 months through January 30, NMG generated $ 2.86 billion in revenue.