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Neiman Marcus Group Inc.'s fiscal fourth-quarter loss widened as
the company took hits from a large impairment charge and weakness
in the broader retail environment.
In July, the privately held Dallas retailer, known for its
opulent holiday catalogs and designer apparel, said it would try to
boost sales with promotions until a new strategy to sell
less-expensive goods kicks in. Earlier this year, Neiman had
scrambled to cut inventories and shrink its work force.
Luxury retailers have been especially hard hit as consumers
started to cut their spending last year and more consumers in all
income brackets traded down to lower-priced stores. In addition,
Neiman carries $2.98 billion in long-term debt as a result of its
purchase by private-equity firms Texas Pacific Group and Warburg
Pincus for $5.1 billion in 2005.
Neiman in previous years had promoted itself as the chain where
shoppers could find some of the most expensive designer merchandise
around, including over-the-top fantasy holiday gifts such as
jewel-encrusted bras.
On Tuesday, Chairman and Chief Executive Burton M. Tansky called
the past fiscal year "very challenging," adding the company cut
costs by $183 million.
Neiman ended the year with $323 million in cash, up 26% from a
year earlier. The company also renegotiated its $600 million
revolving credit facility and extended the maturity to 2013 from
2010.
For the quarter ended Aug. 1, Neiman posted a loss of $168.5
million, compared with a $35.6 million loss a year earlier.
The latest results included $143.1 million in impairment
charges, while the prior-year results had $31.3 million in
impairment charges, including a write-down connected to its Horchow
trade name.
Revenue fell 26% to $768.1 million, while same-store sales fell
23%.
Gross margin fell to 24.1% from 30.5%.
Revenue in the specialty retail segment fell 27%, while the
smaller direct-marketing segment, which includes both the online
and print catalog businesses, declined 18%. The specialty retail
segment swung to an operating loss while direct-marketing earnings
decreased 34%.
Last month, rival Saks Inc. (SKS) reported a 16% drop in
same-store sales for its quarter ended Aug. 1, while margins fell
on continued markdowns.
-By Kathy Shwiff and Joan E. Solsman, Dow Jones Newswires;
212-416-2357; joan.solsman@dowjones.com