DM Strong In Rough Neiman Marcus Quarter
Neiman Marcus Inc. recorded $1.08 billion in second-quarter 2008 revenue, down from the $1.37 billion it pulled in during second-quarter 2007. The company’s net loss amounted to $509.3 million, compared with net income of $44.3 million a year earlier. The quarter ended Jan. 31.
The company’s cost of goods for the most recent quarter was 76.1% of revenue, a significant jump from the 66.5% of revenue it made up in second-quarter 2007.
Neiman Marcus’s second-quarter loss included a $560.2 million impairment charge, which consisted of a $291.1 million writedown of goodwill; $242.2 million impairment related to the value of tradenames and $26.8 million in impairment of assets.
The company also recorded $32.5 million in income related to pension curtailment gains, which was the result of the company’s decision to freeze pension and retirement benefits as of Dec. 31, 2007.
Direct marketing activity amounted to $208.8 million during the quarter, compared with $870.6 million from the chain’s specialty retail stores, meaning that direct marketing pulled in 19.3% of all revenue. During second-quarter 2007, direct marketing generated $237.5 million against $1.14 billion in retail sales, amounting to 17.3% of sales.
Additionally, direct marketing generated $14.7 million in operating income during the most recent quarter. Admittedly, this is down from the $42 million in operating income it saw a year ago, but it stands up well compared to retail store results – a $13.9 million operating loss, compared to $127.9 million in operating income a year ago.
The Opportunist’s Take: Neiman Marcus’s direct marketing activities might be ripe for a hard external push for expansion. Not only did this channel record an operating profit in 2008, but according to the company’s February 2009 revenue results, its direct marketing year-over-year revenue loss was only 1.1%, compared with a 24.2% drop for the specialty retail stores segment. Any vendors out there up for partnering with the chain, either on a reduced-cost-to-use-capacity or shared-risk basis? Neiman Marcus might even throw in its $250 cookie recipe for free. (Yes, yes, we know it’s an Internet hoax. http://www.snopes.com/business/consumer/cookie.asp. Save the nasty notes.)
