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Neiman Marcus’ blues: 81 percent drop in quarterly profit

By Angela Gonzalez-Rodriguez

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Management

Neiman Marcus Group Ltd LLC [NMRCUS.UL] has reported its third consecutive quarterly drop in sales at established stores. The sales’ decrease led to an 81 percent fall in profit amid a slowdown in apparel spending.

"The prevailing sentiment across retailing is that the customer has less interest in shopping in stores, whether it be traditional department stores or other luxury speciality stores," the department stores’ Chief Executive Karen Katz said Wednesday.

Failure to attract customers as online shopping becomes increasingly popular and unseasonably cool weather are the most recurrent arguments used by retailers to justify their sluggish sales for the last quarter.

Neiman Marcus main struggles: unseasonably cold spring and omni-channel

Following this trend, sales at the upscale department store’s shops open for more than a year fell 5 percent for the third quarter ended April, 30.

Sales were hurt by international tourists spending less because of a strong dollar, while economic uncertainty due to stock market volatility and the upcoming presidential elections tempered domestic spending, Katz said.

Rivals Macy's Inc , which runs the luxury Bloomingdale's chain, and Nordstrom Inc also reported lower same-store sales in the quarter.

Neiman Marcus, which also operates the Bergdorf Goodman stores and mytheresa.com, said it was working with its suppliers to reduce inventory by cancelling orders, returning excess inventory and negotiating for additional markdown allowances.

The retail slowdown has spooked suppliers such as Michael Kors Holdings Ltd and Coach Inc , which is pushing department store operators to cut back on promotions.

Neiman Marcus' net income withdrew to 3.8 million dollars from 19.8 million dollars a year earlier. Meanwhile, revenue dropped 4.2 percent to 1.17 billion dollars.

The 108-year-old retailer, owned by Ares Management and Canadian Pension Plan Investment Board, had filed for an initial public offering in August last year. Reuters reported in October that the IPO had been pushed to 2016 due to volatile stock markets.

The retailer is struggling to cope with excess of inventory and an evolving omni-channel ecosystem that is being driven by online sales, highlights ‘Retail Dive’.

Image:Neiman Marcus NorthPark

Neiman Marcus