DALLAS _ Luxury retailer Neiman Marcus on Tuesday reported a loss in its recently completed fiscal year and said Hurricanes Harvey and Irma will have a negative impact on its current-quarter results.
But the Dallas-based company also reported an almost-flat fourth-quarter sales decline of 0.5 percent, an improvement after two years of larger declines. The company has also corrected problems with its new inventory system, said Neiman Marcus chief executive Karen Katz. The system caused havoc for months, starting last fall, and cost the company millions in lost sales but is now starting to pay off, she said.
Katz, more upbeat than in recent quarters, took a conference call with analysts to review year-end results and, despite a significant hit on sales from back-to-back hurricanes in Texas and Florida, said there's "positive momentum for our business in the first quarter."
Houston Galleria, one of the retailer's largest stores, and two of its discount Last Call stores were closed for a week due to Hurricane Harvey. "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.
As a result, sales are expected to decline 1.5 percent in the current fiscal first quarter that started in August, said Dale Stapleton, interim chief financial officer. Though the company's business interruption insurance won't cover revenue lost, it will cover the more minimal lost profit, he said.
Neiman Marcus leaders also said on Tuesday the company is launching a new "digital first" strategy that will involve technology allowing sales staff to better leverage customer data and analytics. For example, staff will be able to look over a customer's preferences and then send her outfit suggestions via text message, Katz said.
"Our online business will continue to outperform our store business and, at 30 percent of total sales, it will continue to grow in importance," Katz said.
She said the new inventory system allows stores to see merchandise in stock across the Neiman Marcus and Bergdorf Goodman chains and warehouses. That led to a 9 percent improvement in online sales in the fourth quarter and the first positive online sales increase for the Bergdorf Goodman website in two years.
After posting its third annual loss in four years, the company had to take a non-cash charge of $357 million to reflect a lower value of its assets, largely related to its Neiman Marcus and Bergdorf Goodman brands.
Neiman Marcus posted a fiscal fourth-quarter loss of $366.3 million on sales of $1.12 billion, compared with a loss of $407 million on sales of $1.13 billion in the same quarter last year.
Its full-year loss was $532 million compared with $406 million the prior year, and total 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.
