Neiman's Demons

The Neiman Marcus Group (Dallas), the upscale retailer group consisting of Neiman Marcus Stores and Bergdorf Goodman, said that it now believes losses for its fourth quarter ending July 28, 2001, will be nearly twice as large as predicted.

The announcement seems to represent the dot over the 'i'in recession. Despite its pricey goods and infrequent markdowns, Neiman Marcus had a run of growth years in the 1990s.

The retailer, which will announce its fourth-quarter and full-year results on Tuesday, Sept. 11, 2001, also reported a 3.4 percent same-store sales decline in July. Total sales for the month were down 2.8 percent from a year ago. The Neiman Marcus Group operates 31 Neiman Marcus stores in 20 states and the District of Columbia, as well as two Bergdorf Goodmans in New York and about 10 clearance centers.

“We took aggressive markdowns to clear merchandise as business softened in the quarter,” said ceo Burton Tansky. “Our clearance strategy has been successful, and inventory levels are in good shape for the fall season. Looking forward, the business environment remains challenging, and we have planned the first quarter very conservatively as we cycle against last year's double-digit comparable revenue.”

Linda Kristiansen, an analyst at UBS Warburg, was quoted as saying that Neiman Marcus'announcement is particularly troubling given that its performance has typically outpaced that of its rivals Saks Fifth Avenue and Nordstrom. Since February 1999, Neiman Marcus has averaged a 6.3 percent same-store sales gain, while Saks has averaged a 0.6 gain, and Nordstrom, an 0.8 percent decline, Kristiansen noted in a report.

“Given Neiman Marcus'results as a proxy for the industry,” she wrote, “July sales at the department stores are likely to be largely negative and below plan.” Neiman's warning follows on the heels of Federated Department Stores'announcement last month that it was reducing its second-quarter and full-year earnings forecast because of weak sales.