What: Quarterly revenue increased roughly 39% from a year earlier to USD 979 million but declined 6.7% from 2019. Fewer discounts helped the retailer grow its margins, and the growth in full-price selling is expected to continue in 2022...

Why it is important: With a new business plan completed last fall, there’s a three-year, USD 600 million capex budget including USD 90 million in supply chain improvements, and USD 250 million in store renovations. A portion of the capex budget will target optimizing websites and apps for improved navigation, product recommendations and enhancing the group’s Connect clienteling tool used by sales associates.

Financial results

The luxury department store chain’s gross margins rose around 855 basis points from 2020 and 537 basis points from 2019. Comparable sales for the first quarter jumped 51% year-over-year and increased 7.3% from 2019. Last quarter NMG’s gross merchandise value was up 13% compared to 2019, and full price selling was up 41%. Regarding NMG’s volume outlook for the fiscal year: “We’ll be at more than USD 4 billion at the end of our fiscal year, running up to fiscal 2019 when we were more than USD 4 billion”, says Geoffroy van Raemdonck, NMG’s chief executive officer.

Customers and clienteling

New customer growth was up 18% and 17% of those placed a second order within 90 days of their first purchase. At Neiman’s itself, sales of its top 20 brands rose 61% versus fiscal 2019. Bergdorf Goodman online is driving “significant growth” compared to 2019: new customers grew by 40% and the average order value of Bergdorf’s online was up 14% in Q1

“Our loyal customers [those spending USD 10,000 or more a year at NMG] are as engaged as in the past but they have shopped less frequently in the last nine months. To better engage with customers, Neiman’s organization of more than 3,000 selling associates is segmented into different classifications depending on how associates interact with customers, including mostly “client advisers” who assist in stores/remote and online, as well as 250 digital client advisers (there will be 500 by mid-2022) based in the stores to meet customers but primarily engaging with them digitally.

There are also 60 digital stylists who only serve customers digitally. Neiman’s also has 108 personal shoppers for appointments in fitting rooms. All the associates utilize Connect.

Sixty-three percent of the customers are Gen X or Millennials, between 25 and 56. It was 48% two years ago”.

Flexible working to attract talents

Like many companies, NMG has established a flexible hybrid workplace arrangement which has helped attract talent. “We believe our associates should work where they have the most impact. We have hired people who are not based in Dallas,” said van Raemdonck. “If you are a tech person based on the West Coast, that is where you spend most of your time. You interact digitally with your colleagues, and at times you come into the office not to check email but to collaborate with everyone.” Four of Neiman’s general merchandise managers and the Neiman’s fashion office are based in New York. Buyers are still based in Dallas, though they spend about a third of their time seeing shows and showrooms in Europe. For those residing in the Dallas area, “We don’t require them to be five days in the office. We encourage them to come in two to three days a week,” said van Raemdonck. Due to the flexibility, “We recruit people faster. It takes 32% less time to hire and our turnover rate is down 20%, compared to 2019.”

Supply chain improvements

A new 500,000-square-foot distribution centre is expected to open around January 2023. NMG is investing in information technology for the centres.

The new facility will reduce deliveries to stores and homes by two days and double the number of customers who can receive shipments within two days.

Responding to rumours

NM says they didn’t lose any of their top 100 brands, not seeing any decline in distribution. Unlike Saks Fifth Avenue, they have no intention of splitting up its dot-com and stores into separate companies.

Neiman Marcus Group Addresses Fiscal Q1, Perceptions and The Path Ahead