Neiman Marcus is heading into the holiday season with a tailwind from its strongest annual results in several years. The Dallas-based luxury retailer reached a level of profitability it hasn’t seen in a long time.
During the retailer’s fiscal year ended in July, about 80% of its sales were at full price, resulting in earnings before interest and taxes of $495 million, or 11% of sales. Anything over 10% is considered good and reflects a company’s control over operating expenses.
Sales increased 33% to $5 billion, including sales from leased vendor shops. Digital site visits, including to the Neiman Marcus app, increased to 300 million in fiscal 2022.
The chain seems to be humming on all cylinders two years after it reorganized in bankruptcy. Half of its stores posted record sales volumes and almost 70% reached their highest revenue in more than a decade.
The company hasn’t run TV commercials in a while, but new fall spots are edgy and feature a personal stylist who solves various customer predicaments. The commercials were shot in New York City and created by ad agency Young Hero.
During the pandemic, the company held onto its customers and added younger Gen X to Gen Z customers as more people returned to normal social lives, said Geoffroy van Raemdonck, chief executive officer of Neiman Marcus Group.
The retailer’s top 2% of customers are “highly loyal,” he said, and drove about 40% of total sales in its fiscal year. Neiman Marcus sales staffers work hard to learn their customers’ tastes and needs.
“Our success is fueled by the company’s 3,000 selling associates,” van Raemdonck said. On average most of the retailer’s salespeople have been part of the company for nearly a decade and more than 1,000 of them bring in more than $1 million in customer spending per year.
“Affluent customers in 2022 returned to stores while continuing to shop online. These multichannel consumers on average spent five times more than those who shopped only one channel,” van Raemdonck said.
In recent weeks as interest rates have been rising and talk of a recession next year escalated while the stock market declined more than 20%, van Raemdonck said he’s watching inventory and costs.
“We believe our business model positions us well as we navigate the uncertain macroeconomic environment ahead,” he said.
Luxury customers are in a better position than in prior downturns. A lot of wealth was created in recent years. About 80% of Neiman Marcus’ top customers have at least $1 million of net worth and their average spending is more than $25,000 a year. This group buys something from the company more than 25 times a year.
The 36 Neiman Marcus stores and its Bergdorf Goodman stores in New York are located within 30 miles of 70% of the high-net-worth individuals in the U.S., van Raemdonck said.
There’s also been a “healthy rebound” of customers traveling into the U.S. to what he calls “gateway stores,” places like New York and Miami.
