Neiman Marcus Group Tops $5B in GMV
The Neiman Marcus Group, capitalizing on the nation’s return to socializing and the luxury sector holding steady, eclipsed $5 billion in revenues on a gross merchandise value basis, and generated $495 million in adjusted EBITDA in its last fiscal year, the company disclosed Wednesday to lenders and investors.
On a comparable basis, NMG was up 33 percent in sales, the company reported. Over the past several seasons, six Neiman Marcus stores and all but five of the Last Call clearance locations were closed.
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Gross merchandise value refers to all the merchandise sold through NMG stores and websites, owned, on commission and through consignment.
“We are really encouraged that we are seeing growth with the luxury customer buying at full price in a low promotional environment,” Geoffroy van Raemdonck, chief executive officer of the Neiman Marcus Group, told WWD. Neiman’s has been striving to sell more goods at full price, whereas most of the rest of retailing has been frenetically discounting to shed excess inventories and battle inflation and softening consumer demand.
Van Raemdonck said he was “very pleased with the company’s strong performance delivered in fiscal 2022,” which concluded July 31, and that NMG was “significantly up” on a net profit basis, though that figure was not disclosed. The privately held NMG selectively released some of its year-end figures to the media.
Neiman’s revenues have climbed back after sharp declines during the pandemic and its five-month bankruptcy in 2020. WWD reported that for NMG’s fiscal 2020, revenues were $3.65 billion, and in fiscal 2019 which preceded the pandemic, revenues were $4.66 billion. Those revenues were not reported on a GMV basis.
“We have a business very focused on luxury and with the right amount of stores,” van Raemdonck said. “Seventy percent of U.S. high net worth Individuals live within 30 miles of a Neiman Marcus Group store.” NMG operates 36 Neiman’s luxury department stores and two Bergdorf Goodman luxury stores, as well as e-commerce for both retail brands, and five Last Call stores for liquidating merchandise.
A few luxury brands sold at NMG stores, such as Louis Vuitton, operate leased shops, whereby Neiman’s doesn’t own the merchandise and instead receives a commission based on sales.
“The vast majority of our business is through owned merchandise,” van Raemdonck said. “What we are seeing are different designer brands using different models depending on the category, geography or the retail partner. [At Neiman’s,] we really feel it’s important that we own the relationship between the sales associate and the customer,” rather than leaving the selling and merchandising to the vendor.
Neiman’s growth, according to van Raemdonck and other NMG executives, has been fueled by the team’s aggressive actions to win over more customers, get its top vendors to add points of distribution at more Neiman’s locations, staging unique, immersive experiences and events rather than the usual pop-up or personal appearance, and because of the 2020 restructuring where the retailer emerged from bankruptcy with far less debt and new owners. Also, part of the comp gains could be attributed to shopper traffic returning to stores in 2022 as the pandemic dissipated.
“We have less than $100 million in debt per and other liabilities annually” van Raemdonck said. Consequently, with its healthier balance sheet, van Raemdonck said NMG has the wherewithal to “strategically reinvest” in store renovations, the supply chain and technology. NMG had roughly triple its current debt load prior to the restructuring.
With a potential recession looming, there’s a possibility that luxury sales eventually soften as did the demand for more moderate-priced and mass merchandise starting in July this year. Asked if he is concerned about that, van Raemdonck replied: “I don’t have a crystal ball to know where the economy is going.”
In the current quarter, business is still healthy, he said. “We are experiencing mid- to high-single-digit growth compared to last year,” van Raemdonck said.
“Right now, we are going into holiday in a cautiously optimistic manner, being very agile in managing the P&L and the inventory. In the last 12 months, we have been able to grow the number of customers. I feel we have a very strong customer base, which is traveling more and buying more of what they love. Our relationships with customers is a source of strength,” the CEO said. NMG kicks off its holiday season on Oct. 25 with the launch of its holiday catalogue and fantasy gifts.
Van Raemdonck said 2 percent of NMG’s customers drive more 40 percent of the revenues, and spend an average of about $25,000 each annually. He also said NMG last year had about 300 million visits on its digital properties, which include neimanmarcus.com and bergdorfgoodman.com. Asked about the revenue split between online and stores, he said, “It’s quite balanced.”
Last April, Farfetch revealed an up to $200 million minority investment in Neiman Marcus Group, in a deal designed to accelerate NMG’s digital and omnichannel evolution. A first step is underway whereby Farfetch has begun re-platforming the BG website, using its technology to update and expand the New York retailer’s global reach. Van Raemdonck told WWD the re-platforming will be complete within the second half of 2023, enabling the website to be shopped in certain foreign languages and different currencies. There will also be some tailoring of the merchandising depending on the international market and its needs, though van Raemdonck stressed, “For the most part, the look and feel will be very consistent,” country to country.
The Farfetch deal represents a big opportunity in technology and digital capabilities, though NMG has been busy in the tech sector. It developed the proprietary Connect system enabling NMG’s than 3,000 selling associates to better communicate with customers remotely; purchased Stylize, which through machine learning offers product attribution data and curated content to power personalization, and took a minority stake in Fashionphile, which sells secondhand merchandise online.
Asked what’s been selling best lately, van Raemdonck said, “We’re seeing continued growth in women’s shoes, in men’s and in women’s designer and contemporary. Those are really the ones that are recovering and were more impacted during COVID-19 because customers were not having a social life.”
In its disclosure, NMG also cited “year-over-year meaningful gross margin expansion supported by healthy 80 percent full-price selling, leading to 11 percent EBITDA margin for [fiscal year 2022].”
“Our top customers are highly loyal and drove 40 percent of total sales in FY22,” van Raemdonck said in a statement.
The company also reported that:
Multichannel consumers on average spent five-times more than those who shopped only one channel.
Nearly 70 percent of NMG stores reached their highest revenue in more than a decade.
More than 200 brands not previously sold at NMG were introduced over the year.
