NMG Seeking Growth: Taps Strategy Exec, Is Barneys Up Next?

Neiman’s named former Sears executive Steven Dennis as senior vice president of strategy, business development and multichannel marketing.

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Speculation Neiman’s was examining Barneys New York came on the heels of Neiman’s stellar year-end report card showing an 87.4 percent leap for the fiscal year ended July 31 and a 187 percent spike in fourth-quarter earnings. For fiscal year 2004, NMG’s total revenues were $3.55 billion, compared with $3.1 billion in the previous year. Comparable revenues increased 14 percent for fiscal year 2004. Net earnings for fiscal year 2004 were $205 million, compared with $109 million for fiscal year 2003.

While showing strong results, garnering wide praise for consistent performances and for having an unwavering commitment to the luxury market even in down times, there are some analysts and retailers raising questions about Neiman’s growth potential. With 36 stores across the country, the chain is already operating in most of the affluent markets that can support one of its stores.

No openings are slated for this year, but there will be openings for fall 2005 in Boca Raton, Fla., and San Antonio, and in fall 2006, in Charlotte, N.C., and Natick, Mass. Taubman Centers is planning to build a mall in Oyster Bay, Long Island, and has stated that Neiman’s plans to be an anchor tenant, though Neiman’s has yet to confirm the opening.

A Barneys buy would give the $3.55 billion Neiman’s an immediate $400 million jolt in volume and eliminate a competitor in New York, Chicago and Beverly Hills. However, analysts have raised concerns that Barneys may be overpriced, with a price tag reportedly set around $500 million, and that Barneys, along with its Co-Op chain of contemporary sportswear stores, also has limited growth potential due to an appeal that targets an even narrower customer base than Neiman’s. Barneys also has some high expenses, including real estate costs.

Years ago, Neiman Marcus Group seriously considered opening a Bergdorf Goodman division outside of New York, but when asked if that strategy could be revisited, Tansky responded, “No, no, no.”

Bergdorf’s once had a branch in White Plains, N.Y., which closed when management determined that resources were better spent on building more Neiman’s branches and improving Bergdorf’s flagship in Manhattan.
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