Luxury retailer Neiman Marcus, Inc. said Wednesday that revenues increased 6.7 percent to $927.2 million for the first quarter of fiscal year 2011. Comparable revenues increased 6.4 percent and operating earnings were $99.8 million compared to $74.8 for the same period of the prior year. Sales were driven by an increase in customer demand and higher levels of full-price sales, something the company has been the focusing on during the past year.
Specialty retail stores sales increased 5.5 percent to $761.1 million with comparable sales up 5.1 percent for the quarter. Operating earnings increased 22 percent to $108 million. The company’s direct business sales (Internet and catalog) increased 12.8 percent to $166.1 million—led by a 16.9 percent increase in Internet sales to $139 million, offsetting a 4.6 percent decline in catalog revenue.
Prior to the recession, Neiman Marcus defined its core customer as spending $12,000 per year at its store. Karen Katz, Neiman Marcus new CEO, said that customer has returned but is spending more thoughtfully and is looking for value.
“I would generally say the core customer is actually shopping,” Katz said. “(But) she is being much more deliberate in how she’s shopping so her spending is not back up to the levels of pre-recession and we don’t have an expectation that it will get back to that level. As a result the way we are thinking about our strategy is that we need to attract other affluent customers into the Neiman Marcus group.”
Katz noted the most affluent customers are again purchasing the highest priced items but other consumers are slow to return to buying more affordable luxury items. This caused the company to make some changes to pricing strategy.
“Generally speaking, things at the high end are doing very well,” Katz said. “We went through what we call the rebalancing of profit in terms of price point. We needed to fill in better in the middle and the opening price points of what we offer and those where we’ve done that we actually had nice success with it. Our handbags division for an example, everything had grown to the high end in handbags and we came back and balanced out the prices there with existing vendors and it’s worked extremely well. And we think that that is helping fuel the success of our handbag business right now.”