Neiman Marcus More Upbeat as Dallas Luxury Retailer Ended Its Year With a Loss and Stemmed Sales Drop

Dallas-based luxury retailer Neiman Marcus reported a loss in its fiscal year and said Hurricanes Harvey and Irma will have a negative impact on its current quarter results.But the company reported a smaller fourth quarter sales decline of 0.5 percent, almost flat after two years of declines, in the three months ended in July, which ends its fiscal year. It also corrected problems with its new inventory system that caused havoc for months starting last fall, said Neiman Marcus chief executive officer Karen Katz.Katz was more upbeat than in recent quarters during a conference call with analysts even with a significant hit on sales from back-to-ack hurricanes in Texas and Florida.Houston Galleria, one of its largest volume stores, and two Last Call stores were closed for a week from Hurricane Harvey, "and Houston is coming back slowly," Katz said. Hurricane Irma forced the closing of seven Neiman Marcus stores and six Last Call stores for an average of five days.The impact will be about 1.5 percentage points to sales in the current fiscal first quarter which started in August, said Dale Stapleton, interim chief financial officer. The company has business interruption insurance, he said, but while it won't cover revenue loss, it will cover the more minimal lost margin.Neiman Marcus is launching a new "digital first" strategy that includes new technology for sales staff to use customer data and analytics. Staff can search preferences and browsing history to create outfits and deliver the suggestions via text messages, Katz said. The new inventory system now allows stores to see merchandise in stock across both chains and in warehouses. That led to an improvement in online sales of 9 percent in the fourth quarter to $363 million and the first online positive sales increase for in two years."Our online business will continue to outperform our store business at at 30 percent of total sales, it will continue to grow in importance," Katz said. The company had to take a non-cash charge of $357 million in the quarter to reflect a lower value of its assets, largely related to its Neiman Marcus and Bergdorf Goodman brands.Neiman Marcus posted fiscal fourth quarter loss of $366.3 million compared with a loss of $407 million in the same quarter last year. Sales of $1.12 billion declined from $1.13 billion last year.Its full-year loss was $532 million compared with $406 million the prior year and sales declined 5.2 percent to $4,71 billion. Neiman Marcus has cut staff, put itself up for sale and then backed off earlier this year. It has decided to preserve cash by making interest payments with more debt. The company has about $5 billion in debt from two leveraged buyouts. It has until 2020 before a major debt payment is due. The company is still evaluating how to handle its capital structure, Stapleton said, but there was nothing new to report on that front. The company ended the quarter with total liquidity of $739 million, largely from a line of credit.   Continue reading...

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