Neiman Marcus Q1 Profit Triples

Dallas—Mirroring increases that many European luxurygoods companies have been reporting recently, Neiman Marcus Inc. posted today a fiscal first-quarter profit more than triple the same quarter last year.

For the quarter ended October 30, the company’s profit rose to $25.7 million from $8.5 million a year earlier. Gross margin widened to 39.3% from 38.5% helped by lower depreciation, amortization and interest costs.

Total sales in its namesake stores, Bergdorf Goodman and Last Call outlets increased 6.7% to $927.2 million from $868.9 million in the same quarter 2009. Comparable or same-store sales from stores open at least a year, rose 6.4% up from a 14% plunge last year. Operating income increased 33% to $99.8 million compared to $74.8 million last year.

Higher Inventories Heading into Holiday

Heading into the holiday shopping period, the company’s inventory level of $946 million was 8% higher at the same quarter last year. Higher inventories are “in response to a growing customer demand,” Neiman Marcus said in its quarterly filing with the Securities and Exchange Commission. It’s likely that the luxury retailer will watch those levels closely.

While noting that economic conditions have improved in recent quarters,” we do not anticipate the return of consumer spending to levels achieved” before the recession, the company said.

Sales in Neiman’s specialty retail segment rose 5.5% as operating earnings grew 22%. The direct-marketing segment, which includes online and catalog sales, had a 13% rise in sales while profit was up 15%. The results show consumers are shifting purchases online from the elaborate catalogs the retailer is known for. Internet sales increased 16.9% to $139.0 million from the first quarter last year. Catalog sales, which include Neiman Marcus and Horchow catalogs, fell 4.6% from a year ago.

The company ended the period with long-term debt of $2.88 billion, down 3.1% from a year earlier. The company’s debt load is due to the $5.1 billion leveraged buyout by its current owners, TPG Capital and Warburg Pincus LLC.

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