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Neiman Marcus Group, confronting a risky 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 12 months. Identical-store gross sales fell 8 p.c 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 mentioned 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.
Internet leverage, or internet debt to EBITDA, jumped to round 4.8 instances, versus 2 instances, year-over-year.
“There’s slowdown in comparison with final 12 months however we proceed to have a really worthwhile enterprise, with a double-digit EBITDA price,” Geoffroy van Raemdonck, chief government officer of the Neiman Marcus Group, advised WWD.
“We even have a wholesome place by way of stock which is all the way down to final 12 months, meaningfully, and we’re getting the products earlier,” he mentioned.
Whereas NMG’s luxurious enterprise has softened considerably, van Raemdonck famous, “We proceed to be very robust in footwear and jewellery, which have been robust and regular for a number of quarters, and we noticed power in magnificence this quarter as effectively.”
Van Raemdonck additionally mentioned the best-performing luxurious manufacturers “are those on the quiet luxurious aspect, the manufacturers which can be much less brand pushed.”
NMG doesn’t count on this upcoming Black Friday weekend to supply 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 worth selling.
Van Raemdonck mentioned NMG “continues to navigate a risky macro surroundings, cautious prospects and elevated promotionally within the luxurious sector. What’s totally different on this quarter is that we’re seeing the engaged buyer slowing down as effectively, although there may be 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 mentioned, “This fall, we started seeing a broader demand deceleration with comparatively constant tendencies throughout all areas of the enterprise. We stay dedicated to our technique and are taking deliberate actions to drive buyer engagement. Our robust liquidity place provides 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 over the past 12 months,” including, “We’re proactively addressing the headwinds we face by lowering 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’ve fostered robust relationships, creating lasting connections with prospects. We stay dedicated to our technique of leaning into relationships, with our 3,300-plus gross sales associates participating with our prospects each in retailer and by way of distant promoting.”
He mentioned that in NMG’s first quarter, greater than 20 p.c of internet gross sales have been both transacted by way of or immediately influenced by gross sales associates interacting with prospects who weren’t bodily current within the shops, which was greater than in first quarter final 12 months.
He additionally mentioned 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 12 months 2021 in know-how, provide chain and retailer renovations.
As well as, NMG has a “packed calendar stuffed with trunk exhibits and activations,” van Raemdonck mentioned. NMG and different retailers may also be benefited by the additional purchasing day between Thanksgiving and Christmas — 32 days this 12 months versus 31 final 12 months — and since with Christmas Day touchdown on a Monday this 12 months, there may be a whole week simply earlier than to buy.
Geoffroy van Raemdonck
Katie Jones/WWD
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