Neiman Marcus Powers Ahead With 187% Spike in Earnings

Inventory and expense management led to the Neiman Marcus Group’s 187 percent leap in earnings in the quarter ended July 31.

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Burt Tansky

Photo By WWD Staff

Neiman Marcus in Atlanta.

Photo By WWD Staff

NEW YORK — The Neiman Marcus Group reported skyrocketing gains in fourth-quarter and full-year profits Tuesday, helped by the company’s concentration on inventory and expense management and fewer merchandise markdowns.

In the quarter ended July 31, the Dallas-based luxury retailer earned $20.6 million, or 42 cents a share, representing a 187 percent jump from $7.2 million, or 15 cents, in the year-earlier period. Results included a $3.9 million pretax charge for the impairment of the company’s Chef’s Catalogue tradename. Neiman’s own estimate was for earnings of 30 to 35 cents.

Excluding the charge, Neiman earned $22.9 million, or 47 cents, in the just-completed quarter, which beat analysts’ estimates of 36 cents in earnings per share.

Revenues increased 12.3 percent in the fourth quarter to $789 million from $702.7 million, with same-store sales up 12.5 percent. By segment, specialty retail revenues rose 11.1 percent to $641 million from $577 million a year ago, and Neiman Marcus Direct’s quarterly revenues rose 19 percent to $125 million from $105 million last year, the company said. The company also posted a 9.5 percent gain in its “other” segment to $23 million from $21 million, which includes the operations of the Kate Spade and Laura Mercier brands.

Earnings in fiscal-year 2004 jumped 87.4 percent to $204.8 million, or $4.19, from $109.3 million, or $2.29, in 2003. Profits before certain items, including the Chef’s Catalogue impairment charge, were $199.7 million, or $4.09, compared with $124.1 million, or $2.60, a year ago.

In the fiscal year, revenues were $3.55 billion, an increase of 14.4 percent over the prior year’s sales of $3.1 billion. Comparable-store sales increased 14 percent.

“We had an outstanding quarter and year in ever aspect of the Neiman Marcus Group,” Burt Tansky, president and chief executive officer of Neiman Marcus Group, said during a conference call. He said the key to the success is “our steadfast commitment to highest standards of customer service and merchandising”

But Tansky expressed some caution about the months ahead, adding, “Beginning this year, sales growth will be more challenging.” He predicted a 7 to 9 percent comp gain in the first quarter, against 10.7 percent gain in the first quarter of the previous year. Still, the first-quarter guidance was an increase from a prior estimate for positive 5 to 7 percent first-quarter comps.
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