After Delaying IPO, Neiman Marcus Sees Sales, Profits Fall

The company lost $10.5 million between August and the end of October.
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Lauren Indvik
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The company lost $10.5 million between August and the end of October.
A shopper at Neiman Marcus Beverly Hills. Photo: Rachel Murray/Getty Images for Neiman Marcus Beverly Hills

A shopper at Neiman Marcus Beverly Hills. Photo: Rachel Murray/Getty Images for Neiman Marcus Beverly Hills

It's tough out there for U.S. department stores right now, and Neiman Marcus — owner of Bergdorf Goodman, MyTheresa and its namesake chain of department stores — is no exception. On Monday afternoon, the company revealed that it lost $10.5 million in the three months ending Oct. 31, after eking out a small profit of $196,000 in the same period a year ago. That's not good. Neither is the 5.6 percent drop in comparable sales (that is, sales in stores open for at least year) after nearly six years of consecutive growth. Overall sales amounted to $1.16 billion, down 1.8 percent year-over-year.

With those numbers, it's little wonder that Neiman Marcus and its backers, New York private equity firm Ares Management LP and the Canada Pension Plan Investment Board, decided to delay the initial public offering they had planned to take place at the end of the holiday season.

In a call with investors, Neiman Marcus CEO Karen Katz attributed the "disappointing" results to the strong dollar, which has negatively impacted tourist traffic in key stores, and has encouraged customers to shop abroad for luxury products. And — lest we forget that Neiman Marcus is headquartered in Dallas — she noted that the ongoing price decline of crude oil has also negatively impacted spending.

Looking ahead, Don Grimes, Neiman Marcus's chief operating and financial officer, said the company is working to reduce inventory levels, and is "aggressively managing future purchases." Since the company buys its inventory six to nine months ahead of time, Grimes said the company's inventory may not hit the right levels until April or July. The company is also looking at ways to modify its offerings at its tourist-heavy stores, assuming that the dollar continues to remain strong.

"We have experienced these cycles before and we know how to navigate through them," Katz said.