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

The Neiman Marcus Group is again investing in its enterprise, rebounding to pre-COVID-19 ranges and redefining its office and tradition.

That’s in keeping with Geoffroy van Raemdonck, NMG’s chief govt officer, and Lana Todorovich, president and chief merchandising officer for Neiman Marcus, who spoke at size with WWD on the corporate’s latest efficiency, on the place the retailer is investing hundreds of thousands, and the way it’s striving to, as they stated, “revolutionize the luxury experience.”

With a brand new marketing strategy accomplished final fall, there’s a three-year, $600 million cap-ex funds that earmarks $90 million in provide chain enhancements over the following two years, and $250 million in retailer renovations — lengthy overdue — with $100 million of that “committed” by landlords. Also, 60 arduous outlets, many for luxurious leather-based items, are within the works for 2022 launches and a lot of that expense might be shouldered by the manufacturers. NMG operates 37 Neiman Marcus shops and two Bergdorf Goodman shops in Manhattan.

According to Bob Kupbens, NMG’s chief product and know-how officer, a good portion of the cap-ex funds will goal optimizing web sites and apps for improved navigation, product suggestions and personalization; enhancing the group’s Connect proprietary clienteling software utilized by gross sales associates to speak with clients by way of electronic mail, chat, telephone calls, photographs and movies, and for upgrading order and warehouse administration techniques and cyber safety. Last October Neiman’s on-line was accessed in a knowledge hack, elevating questions on whether or not there had been previous enough funding in know-how infrastructure and techniques to assist forestall cyberattacks.

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There’s been some hypothesis that NMG remains to be fragile since rising from chapter in September 2020, and that sure luxurious manufacturers have diminished distribution to Neiman’s. Van Raemdonck strongly refuted that hypothesis, nevertheless, stating, “There is a notion on the market which is the other of the truth. We have misplaced none of our prime 100 manufacturers. We usually are not seeing any decline in distribution. We have added extra manufacturers up to now yr than we have now during the last 10 years. We have elevated the variety of doorways with LVMH [Moët Hennessy Louis Vuitton] tremendously. It is similar with Kering. That’s as a result of we have now the full-price luxurious buyer and luxurious manufacturers are on the lookout for full-price promoting proper now.

“From a balance sheet standpoint, we really are very comfortable. We generate positive cash flow that we can reinvest into the business,” stated van Raemdonck. “The available liquidity is above $1 billion. We have no money drawn on our revolver. Net debt is less than $700 million. Our cost of debt is around $70 million a year. It used to be $365 million.”

Disclosing some efficiency metrics for the privately held NMG’s fiscal first quarter, which ended Oct. 30, van Raemdonck stated the corporate’s gross sales rose 7.3 % on stock that was down 14.9 % in comparison with the corresponding quarter of 2019. “Inventory was down because we were cautious — not because we didn’t get deliveries,” he stated.

“We see a continued improvement of our performance. Over the last eight months, it’s been positive to 2019 and that [positive trend] keeps accelerating.”

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Regarding NMG’s quantity outlook for the fiscal yr: “We’ll be at more than $4 billion at the end of our fiscal year, running up to fiscal 2019 when we were more than $4 billion.”

Last quarter NMG’s gross merchandise worth was up 13 % in comparison with 2019, and full worth promoting was up 41 %, van Raemdonck stated. New buyer development on the group was up 18 % and 17 % of these positioned a second order inside 90 days of their first buy. At Neiman’s itself, gross sales of its prime 20 manufacturers rose 61 % versus fiscal 2019. This resulted in a string of three consecutive quarters of double-digit development for these manufacturers at Neiman’s.

The CEO stated Bergdorf Goodman on-line is driving “significant growth.” He stated in comparison with 2019, new clients grew by 40 % and the common order worth of Bergdorf’s on-line was up 14 % in Q1.

In November, GMV was up nearly 20 % and full worth promoting rose 39 %, he added.

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“November was very strong. What is really exciting to see is that customers have bought early and they have bought at full price. I am wondering that with customers buying early, will there still be a rush before Christmas? For the last three years, shopping the week before Christmas was a frenzy.”

Asked if the momentum he sees now will spill into 2022, van Raemdonck answered: “I don’t have a crystal ball, however what we have now seen is large development in full-price promoting — and with new clients.

“Our loyal customers [those spending $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. When life returns to normal, that customer frequency is going to come up,” he stated. “When people go back to the office, back to traveling and back to big parties, they will increase their frequency” of purchasing.

On the opposite hand, “We may see a little bit of tapering off of shopping by new customers,” thought of first-time customers or these returning after being absent for at the least a yr. A decline might be as a result of some shift in spending from items to extra on journey and different experiences if the pandemic wanes.

Currently, “We are seeing continued growth and it is really full price,” stated van Raemdonck. “We moved markdowns later in the season and we entered the Black Friday-Cyber Monday period with very little promotion and very little inventory that was not full price. We want to be engaged with customers who buy full price and have the potential to come back to us regularly, and we are spending to cater to that customer.” NMG has been shrinking its Last Call clearance chain, which is down to 5 models, furthering the full-price positioning.

“The big message is Neiman Marcus and Bergdorf Goodman are focused on the luxury customer who buys full price and has the potential to be in a relationship with us. What we want to do is revolutionize the traditional way people buy luxury so it’s much more from a relationship, and specifically not transactional,” stated van Raemdonck.

“Revolutionizing luxury experiences — that’s a big concept,” added Todorovich. “What it means is we don’t see ourselves as a retail platform providing a lot of access for customers to different products and brands. For us, luxury is about relationships. That is a big differentiator for us. Relationships trump transactions. How you connect with customers is so much more valuable to us than getting the sale.”

To higher have interaction with clients, Neiman’s group of greater than 3,000 promoting associates is segmented into totally different classifications relying on how associates work together with clients, together with principally “client advisers” who help in shops/distant and on-line, in addition to 250 digital shopper advisers (there might be 500 by mid-2022) primarily based within the shops to satisfy clients however primarily participating with them digitally; and 60 digital stylists who solely serve clients digitally and usually dwell in proximity to shops to generally meet with them. Neiman’s additionally has 108 private customers for appointments in becoming rooms. All the associates make the most of Connect.

Van Raemdonck instructed WWD that NMG — like many firms within the COVID-19 period — has established a versatile hybrid office association which has helped appeal to expertise. More than 30 % of the company associates reside exterior of Dallas, the place the group is headquartered. NMG additionally has considerably bolstered its senior administration staff during the last yr with appointments in innovation, product design, buyer insights and knowledge and digital technique.

“We believe our associates should work where they have the most impact. We have hired people who are not based in Dallas,” stated van Raemdonck, who grew to become CEO in March 2018. “If you are a tech person and 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. That is very progressive. An incredibly central part of our philosophy is we want people to work where they have the biggest impact. Some roles are Dallas-based; some are not.”

Four of Neiman’s common merchandise managers and the Neiman’s vogue workplace are primarily based in New York. Buyers are nonetheless primarily based in Dallas, although they spend a few third of their time seeing exhibits and showrooms in Europe; a 3rd of their time doing the identical in New York, and a 3rd of their time in Dallas, in keeping with Todorovich.

For these residing within the Dallas space, “We don’t require them to be five days in the office. We encourage them to come in two to three days a week,” stated van Raemdonck, once more echoing a versatile work plan being adopted by many firms in the course of the pandemic.

Neiman Marcus Group Addresses Fiscal Q1,

Neiman Marcus in downtown Dallas. Fate to be decided.

NMG moved out of its Dallas headquarters and is within the course of of building a “hub” within the space for workers from totally different components of the nation to collect for conferences, and others will repeatedly work out of the hub. The firm’s headquarters had been unfold throughout 4 buildings, together with the downtown Neiman Marcus retailer. The hub will make communications and collaboration simpler, van Raemdonck famous.

Due to the pliability, “We recruit people faster. It takes 32 percent less time to hire and our turnover rate is down 20 percent, compared to 2019,” stated van Raemdonck.

Expressing his philosophy on management and creating the staff, van Raemdonck stated, “It’s actually vital to me that we promote a way of belonging and profession path for many who usually don’t see the identical profession path. We rent the most effective folks however at all times take a look at a various base of candidates, and we create an setting the place minorities really feel empowered. The majority of Neiman’s staff are feminine and non-white, and the vast majority of the board is feminine with ethnic illustration.

“But there are many more things we need to do. As one of the very few gay CEOs it’s important to lead with the notion that you show up as yourself and invite everyone. I think it links to the notion of growth. You need to represent your customer base.”

Unlike Saks Fifth Avenue, NMG has no intention of splitting up its dot-com and shops into separate firms. Van Raemdonck pressured the significance of sustaining an “integrated retailing” enterprise mannequin encompassing shops, e-commerce, and “remote selling,” whereby associates make the most of the proprietary Connect promoting know-how.

“We know the customer who buys across those channels spends 4.5 times more within a year than a customer who only buys in one channel,” stated van Raemdonck. “We are really saying we consider stores, online and the third channel of remote shopping as the one face of Neiman Marcus and Bergdorf Goodman. It’s not different faces or different businesses.” Separating dot-com and shops into separate companies, “That’s not on the strategy for us.”

For van Raemdonck, a luxurious expertise resides in “being guided and inspired to find the right product for you. It’s all about the relationship. Omnichannel retail, which we call integrated retail, it’s always being able to have a human being help you.” NMG works arduous to leverage its brick-and-mortar fleet, holding 800 occasions in its shops within the first quarter alone, in addition to 10 immersive pop-ups since June.

He’s not referring to Neiman’s as evolving right into a “luxury platform” as a result of it’s been too usually related to an “endless aisle” of merchandise and costs or a market format that different retailers corresponding to Saks, Nordstrom and Macy’s are evolving into. “We really are focusing on women’s designer ready-to-wear, handbags, shoes, men’s, and precious jewelry,” the CEO stated.

Last month Neiman’s launched “Stanley,” an app that gives a every day feed of three or 4 vogue tales primarily based on previous purchases and what customers checked out up to now, for a component of personalization and discovery. “If you bought a gray suit, we present a blue suit because we think you might like it,” van Raemdonck stated. “This app is by invitation only, for people who really want to be in a relationship. We believe it’s made for people who look for engagement, for inspiration, not for one product.” The retailer despatched out 52,000 invites to hitch Stanley. Through the app, a consumer can attain a stylist or gross sales affiliate, and make purchases. Video and audio capabilities will quickly be added.

While there’s a notion that Neiman’s attracts older customers, van Raemdonck stated, “Sixty-three percent of our customers are Gen X or Millennials, between 25 and 56. It was 48 percent two years ago.” He attributed the change to wealth being transferred to Millennials, and the pandemic triggering higher curiosity in luxurious. “If you don’t travel, you discover luxury. Once you get into luxury, I don’t think you walk away from it, but maybe the level of spend tapers a bit” as COVID-19 recedes.

Explaining enhancements to the provision chain, a brand new 500,000-square-foot distribution heart is anticipated to open round January 2023 in Pittston, Pa., double the scale of an outmoded one close by, Raemdonck stated. Also, the distribution heart in Dallas is being expanded in phases. NMG is investing in data know-how for the facilities. The Pennsylvania facility will scale back deliveries to shops and properties by two days, and double the variety of clients who can obtain shipments inside two days. Both facilities deal with on-line and retailer achievement.

The Bal Harbour, Fla., retailer is slated for a full growth and renovation, as is the shop in Tysons Corner, Va. The Atlanta, Paramus, Westchester, San Diego, Houston, Oakbrook and St. Louis shops might be partially renovated. Bergdorf’s can be slated for some upgrades, and growth to a few greater ranges is into account.

Meanwhile, “Every store is being touched with investments in shops-in-shop,” stated van Raemdonck. Adding eating places and bars are a part of the agenda, too.

The Natick, Mass., retailer might be closed, although NMG hasn’t revealed precisely when. No resolution has been made on the way forward for the downtown Dallas retailer, van Raemdonck stated. NMG will stay a Dallas-based firm, nevertheless. “Dallas is the anchor. It’s important that companies have a heart and center,” he stated.

On the seller problem, “They are focusing on selling direct-to-consumer and focusing on growth with us,” stated Todorovich. “We do have the luxury customers they want to sell to. When they operate their stores next to ours, we both grow. But when luxury customers come to Neiman Marcus, they come for lifestyle. They can shop across brands which you can’t do in vendor stores.”

Although the retail panorama is as aggressive as ever, Todorovich pressured that Neiman’s nonetheless captures main exclusives. She stated Neiman’s is the one retailer within the omnichannel multibrand world to promote the total expression of Tom Ford’s assortment except Ford’s personal shops, and that NMG has ongoing unique preparations with Van Cleef & Arpels, Goyard, Jil Sander, Gabriela Hearst on-line, and with Jeff Koons X Bernardaud sculptures, apart from artwork galleries. Upcoming exclusives embrace an Alexander McQueen vacation “Silver” capsule, a jean assortment from Purple, and from Brunello Cucinelli, a “Dream of an Italian Summer” assortment of girls’s and males’s able to put on, purses, footwear and equipment. She additionally stated that Neiman’s has been working intently with Prada and Burberry on unique merchandise and installations.

For spring, over 65 manufacturers are being launched to NMG, primarily modern labels and some luxurious strains, Todorovich stated. Sixty designer arduous outlets are within the works for 2022, principally for leather-based items, and 65 to 90 are within the planning phases for the yr after. “In leather goods, hard shops are still the model for how our customers shop, there are some in ready-to-wear planned as well, but we also have a large advanced contemporary business where it is not the case,” stated Todorovich. “Between fall and spring 2022 we have now the most important distribution growth in a decade — about 500 new luxurious factors of distribution. We have the means to spend money on the shops and spend money on stock. The manufacturers are following us. They wish to be in additional doorways, do extra exclusives, and wish to do extra occasions with us. They are rising with their very own shops and  rising with us.

“We don’t define ourselves by selling products,” Todorovich stated. “We define ourselves by building relationships with customers that leads to curating the right products for them. It doesn’t start by selling. It starts by inspiring you and providing the inspiration you buy.”

Anish Melwani, chairman and CEO of LVMH North America, giving his perspective on wholesaling to multi-brand retailers, instructed WWD, “As luxury brands get larger and stronger, they seek to control more of their distribution. Louis Vuitton is an example of a brand in our group that had wholesale at one point and has moved systematically to only having its own stores although some of the stores are shop-in-shops inside department stores. That is a strategic direction that has nothing to do with Neiman’s personally. It’s global, not just in the U.S. You are seeing Dior doing it now, and other brands do it little by little. Outside of our group, Gucci has done it. You go from wholesale to a leased department and eventually if the business is big enough and can be sustained, you move out of a leased department to a freestanding store. Often as Louis Vuitton has done, you sometimes keep the leased department even when you have a freestanding store in the same center because it all comes down to, does a department store have a loyal clientele that prefers to shop in a multi-brand environment? The challenge is some department stores, and I’m not thinking about Neiman Marcus directly, lose that client draw and become less valuable to brands, especially stronger brands.”

Melwani stated that since NMG emerged from chapter, “We’ve in all probability expanded factors of distribution partially as a result of they reduce a lot on their shopping for after they had been going via Chapter 11. A companion like Neiman’s is most respected to manufacturers which can be nonetheless making an attempt to construct their consciousness and desirability amongst clientele within the U.S. If you will have a model that has ubiquitous consciousness and excessive desirability, than the worth add of any retail companion is restricted.

“To me, an important metric with a division retailer that’s simply measurable is full worth sell-through — what % are they promoting at full worth earlier than it goes on markdown. To the extent Neiman’s has expressed a shift in technique to actually deal with relationship promoting and driving higher full-price sell-through, that may be a excellent alignment with what we’re on the lookout for. On the opposite hand, if any technique of different malls are yielding extra gross sales on markdown, we don’t want anybody to assist us promote off-price.

“Certainly, NMG’s overall situation feels less precarious than when we were looking out for a Chapter 11, which very quickly became reality with COVID-19,” stated Melwani. “I’m hoping that all of this leads to their ability to do the upgrading and maintenance deferred for so long to bring some of their physical locations back to the glory they were known for.”

“We enjoy a great relationship with the new management,” stated Brunello Cucinelli, designer and CEO of the Italian model bearing his identify. “Yesterday we had this two-hour discussion with my team in New York, their team in New York and myself,” just about, Cucinelli stated final week. “We talked about taste, plans for the coming five to 10 years. I am sure we can grow together with true luxury. I spoke with Geoffroy and Lana. They seemed serene. The mood was OK. The perception was of a healthy, sound company. They really believe in taste. When they come to view the new collection, we are always on edge waiting for their feedback. This shows you hold them in high regard. They are the first to see the men’s collection. Saks and Neiman’s, they are obviously competitors, they keep asking who is better — I say they are both great.”

Asked if he’s rising or lowering wholesale, Cucinelli replied that there’s a 50-50 steadiness between wholesaling and retailing via his personal shops, such because the lately expanded Manhattan flagship on Madison Avenue. “We would like to maintain this ratio with the American market.” He sees no change forward within the variety of Neiman’s doorways promoting Cucinelli. He offers a “very limited quantity” of unique product to Neiman’s. “My philosophy is one single collection, the very same, for all my customers.”

He stated multibrand shops function “a source of inspiration for our own retail. When we put together our own stores, we always take a peek at what’s in their stores.”

Cucinelli stated his enterprise is barely bigger at Neiman’s than at Saks.

“Saint Laurent’s longstanding partnership with Neiman Marcus continues to be very solid,” Francesca Bellettini, president and CEO of Yves Saint Laurent, stated in an announcement. “Neiman Marcus is at the forefront of client engagement and retention, and values the importance of creating a true luxury experience as much as Saint Laurent does.”

Neiman Marcus Group Addresses Fiscal Q1,

Neiman Marcus on Michigan Avenue in Chicago.

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