Dive Brief:

• Neiman Marcus announced it is closing 10, or about 25%, of the Last Call outlet locations to focus on its full-line luxury department stores, according to a statement emailed to Retail Dive.
• "This decision is about optimizing our Last Call store portfolio to deliver the best customer service and freeing up resources to support new initiatives for our full-line Neiman Marcus and Bergdorf Goodman channels," Elizabeth Allison, senior vice president of Last Call, said in the statement. "We are investing in our strengths as the clear leader of high-end luxury retail." 
• The company said in July that it planned to review the size of its Last Call footprint to ensure we have the right mix of brick and mortar and online stores to meet our customers’ evolving demands," according to a spokesperson at the time. The retailer also said it planned to slash 225 jobs across its brands and operating divisions.

Dive Insight:

Neiman’s decision to shrink its discount presence runs against the current of other mid-tier and high-end department stores, which have largely been expanding into the outlet and off-price market that is has gobbling up a substantial piece of their market share.

Macy’s expects to have 40 of the off-price Backstage locations open by the end of this year. The store-within-a-store version of Backstage represents not just an entry into a hot sector, but also a chance to make its stores more productive and hopefully give customers a reason to come to Macy’s stores and stay instead of heading to a T.J. Maxx or Ross.

Nordstrom, on the other hand, has built its $4 billion Rack concept entirely outside and away from the full-line department stores, which are famous for their high-touch customer service that runs counter to the outlet model.

In August, Nordstrom executives told analysts that the company opened six stores in the spring with plans to open another 11 this fall, making for a total of 232 Rack locations by the end of the year, according to a Seeking Alpha transcript. Sales for the company’s off-price business rose 9.8% in the second quarter, with comparable sales up 3.1% — a number that disappointed management but stands in stark contrast to many retail earnings releases.

Hudson’s Bay Co., which owns Saks Fifth Avenue and Lord & Taylor department stores, also also recently opened 26 new Saks Off Fifth discount stores, which helped contribute $64 million in sales to the company’s second quarter topline numbers.

But Neiman is kicking this trend by focusing on its higher-margin luxury business. The move to scale back the off-price fleet comes during a challenging year for the retailer, one that saw the company back away from IPO plans, shuffle its c-suite and drop buyout talks with Hudson's Bay. The Canadian parent of Saks Fifth Avenue reportedly found the price steep given the heavy debt load attached to Neiman, which goes back to the company’s $6 billion leveraged buyout by private equity firm Ares Management and Canada Pension Plan Investment Board.

Beyond to its debt woes, comparable sales at Neiman have fallen for seven straight quarters, according to Moody’s, which gives the retailer a distressed rating. A Neiman spokesperson told Retail Dive in July that the company has adequate liquidity to both deal with its debt and invest in "long-term growth opportunities."