Dr. P.V. Viswanath |
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Neiman Plans Lower-Priced Strategy |
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Neiman Marcus Group Inc. swung to a fiscal third-quarter loss on a 24% sales decline and disclosed a merchandising strategy that calls for more lower-priced goods. Until the new strategy kicks in, the Dallas luxury-goods retailer known for its lavish holiday gifts catalog and designer apparel expects to offer promotional and other events to boost sales. The company, owned by private-equity funds TPG Capital and Warburg Pincus LLC., described the new strategy as "rebalancing" its merchandise to include less-pricier goods within its designer collections. In addition to ongoing expense cuts, Neiman said it would reduce capital spending in its next fiscal year by about 25% from the between $105 million and $115 million it expects to spend this year. Burt Tansky, the company's chief executive officer, said Wednesday that the retailer doesn't see the economic slide ending soon. "We believe that the recovery is tentative and any improvement will be gradual," he told investors in a conference call. As a result, it is pursuing what he called a "conservative" merchandise-buying plan for the fall. He said that while customers hadn't questioned its prices in the past, "we are sensing a shift in our customer's mind-set." Neiman's new merchandising strategy "will strengthen our position in mid-price" goods, he said. "This is not something that will occur overnight," Mr. Tansky cautioned, noting the larger impact wouldn't be seen in its stores until the spring. For the quarter ended May 2, privately held Neiman reported a net loss of $3.1 million, compared with prior-year net earnings of $55.4 million. Higher markdowns and promotion costs pushed gross margin to 36.5% from 40% a year ago. Last month, Neiman reported third quarter revenue fell to $810.1 million from $1.06 billion. The retailer operates 40 Neiman Marcus stores, the Bergdorf Goodman store in New York City, and six Cusp boutiques.
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