Luxe's Winning Strategy: Neiman Marcus Profits Climb 19.3% in Quarter

Neiman Marcus Group saw second-quarter profits rise 19 percent to $70.6 million, as sales gained 7.7 percent to $1.13 billion from $1.05 billion.

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“The May-Federated merger is in its infancy. We are watching it with great intensity to see if there’s any opportunity that will surface. We [would be] interested in the most important sites….We have a very disciplined, very thought-out expansion plan,” the ceo said.

As for Neiman’s business, Tansky said strong sellers in the quarter were women’s handbags, “driven by an explosion of color.” He added that contemporary sportswear, complimented by denim and embellished jeans, did well. On the accessories front, ponchos and designer jewelry did well, too.

The ceo said he is “very encouraged by early sales performance of resort merchandise.”

The company said separately that February revenues rose 6.5 percent to $275 million from $258 million, with comps up 7.7 percent to $273 million from $254 million. Based on early response to spring merchandise, Tansky said that third-quarter comps are expected to increase by 3 to 5 percent.

“We are confident that our customers find our merchandise very inviting,” Tansky said.

Significant trends for spring so far include dangle bracelets, espadrille shoes, sandals and high heels, as well as gypsy and bohemian looks in sportswear, the ceo noted.

On the operational side, the company has implemented a locker-stock inventory program that keeps key items in a central location. The point is to be able to ship merchandise directly to the consumer if it is unavailable in the store, which will improve customer service as well as inventory turns.

For the six months, income rose by 16.7 percent to $134.7 million, or $2.73 a diluted share, from $115.4 million, or $2.37, in the comparable year-ago period. Excluding the loss on the disposition of Chef’s Catalog in the first quarter of fiscal 2005 and the $7.5 million tax impact in the second quarter of 2004, adjusted earnings were $2.92 a diluted share. Revenues increased by 9.1 percent to $2.04 billion from $1.87 billion.

Analysts pondered what the changes at Barneys New York, which was bought by Jones Apparel Group last year, and Federated might mean for Neiman’s. According to Tansky, “Our position won’t change at all. We are at the very top, the most affluent customer, that’s our niche. It will have no impact on us. We are a very intense observer of the scene and are very interested in how all that will play out.”
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