NEW YORK (Reuters) – Upscale retailer Neiman Marcus Inc reported sharply lower quarterly profit as worried consumers continued to avoid luxury items amid a slowdown the company expects will last for some time.
Sales at its namesake Neiman Marcus and Bergdorf Goodman stores open for at least a year, or same-store sales, continued to fall, dropping 14.9 percent during the quarter. Overall comparable sales, including its direct marketing segment, declined 13.7 percent.
Neiman Marcus, in a regulatory filing on Wednesday, cited “a challenging economic and retail environment” that it said would likely persist for an “extended period of time.”
The downward sales trend has continued in the current quarter, it said. Last week the company reported same-store sales at its Neiman Marcus and Bergdorf Goodman stores had fallen 12.7 percent in November, a period that includes the busy holiday shopping weekend following Thanksgiving.
Those two store chains account for about 83 percent of the company’s revenue.
Neiman Marcus said it experienced weak demand across all geographic areas and that its apparel and home decor categories were particularly hard hit.
SHRINKING SALES, PROFIT
Neiman Marcus said revenue in the fiscal first quarter, ended Oct. 31, fell 11.9 percent to $868.9 million.
The privately-held company reported a net profit of $8.5 million, down from $12.9 million a year earlier.
As has been the case with rival upscale retailers Saks Inc (SKS.N) and Nordstrom Inc (JWN.N), Neiman Marcus has maintained tighter inventory controls to avoid having to steeply discount merchandise to get it off shelves. Last year it was not uncommon to see luxury stores slash prices by 70 percent.
Neiman Marcus said its comparable inventories were 22.5 percent lower in the quarter than a year earlier.
Neiman Marcus was acquired by an investor group led by Texas Pacific Group and Warburg Pincus LLC in October 2005. (Reporting by Phil Wahba; additional reporting by Nivedita Bhattacharjee in Bangalore; editing by John Wallace)