Expenses, Markdowns Flattened Neiman Marcus Q2 Profit

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Dallas—Burdened with a one-time interest expense during its holiday quarter, Neiman Marcus Inc., owners of Neiman Marcus and Bergdorf Goodman stores, reported Tuesday a flattened second quarter profit.

For the quarter ended Jan. 26, the luxury retailer had net income of $40.4 million compared to net income of $40.1 million a year ago. Excluding a one-time $9.4 million cost associated with the redemption of debt, net income was $49.8 million, up 24% from a year ago.

Total sales increased 6.3% to $1.36 billion from $1.28 billion a year ago. Comparable store sales increased 5.3%.

Operating profit increased 14.5% to $124.4 million compared with $108.7 million a year ago.

The retailer’s holiday quarter profit was also hit by more markdowns, both online and in store, according to Jim Skinner, chief financial officer. Also, the store had another added expense: the cost of free shipping which Skinner said the customer “has come to expect, especially during the holidays.”

The Neiman Marcus Group had invested in an e-commerce company based in China last year and that business began operating during the quarter. Neiman Marcus also began shipping internationally to customers outside the United States.

Online sales during the quarter hit $314.7 million, up from $266.9 million a year ago.

Analysts believe some of the markdowns cited in the quarterly report may have included the collaboration between Target and Neiman Marcus which included a collection of gifts created by 24 designers at retails ranging from $7.99 to $499.99. The collections were sold at both stores and prices were slashed 70% off on some of the merchandise after Christmas.

 

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