Dive Brief:
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Upscale department store Neiman Marcus Monday reported Q4 and fiscal year same-store sales fell 4.1% — the fourth straight quarter of declines. The company also reported a Q4 loss of $407.2 million, down from a loss of $32.9 million in the year-ago period, dragged down by $466.2 million in write-downs tied to the value of assets, including trade names and real estate.
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Revenue fell 3.3% to $1.13 billion during the quarter, down from $1.17 billion last year, continuing a downward trend that executives attributed to a challenging retail environment and a strong dollar discouraging tourists from shopping.
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President and CEO Karen Katz blamed the sales tumble in part on the demand for instant gratification in runway fashion. "[T]here's an entirely new class of fast fashion retailers whose business model is to bring the trends to market in a relatively short amount of time," she told investors. "Which means that many customers have likely already bought and worn the trend by the time the authentic runway looks are delivered to stores.”
Dive Insight:
The department store's struggles are fomenting talk that Neiman Marcus will be up for sale, including speculation that it will be bought up by Saks Fifth Avenue parent company Hudson’s Bay Co, according to the Dallas Morning News. The company, which was taken private in 2005 to accomplish a turnaround, filed for an initial public offering last year, but pulled back amid a bleak outlook for luxury retail. The company's results in recent quarters mean that a second IPO attempt is unlikely.
The luxury department store is lagging behind a growing "see now, buy now" trend. While several key brands, including Burberry and Tommy Hilfiger, have made significant changes in their supply chains that allow them to instantly sell designs the moment they’re off the runway, Neiman Marcus hasn’t seen the benefit of that quite yet, if it ever will.
Not all brands have made the move to begin selling styles off the runway, and the instant channels don’t necessarily include department stores. In fact, several brands, including Ralph Lauren, which has been mightily dependent on department store sales for decades, are backing away from those retailers as they continue to suffer sales and traffic declines.
Neiman Marcus CEO Katz told analysts that the trend isn’t just a function of luxury sales, but that fast fashion has also helped ensure that many consumers have new styles in their closets before they’re on Neiman Marcus racks. “The fashion cycle is out of sync with the customer,” she said.
“Until a few years ago, only retailers in the fashion media attended the major fashion show,” she continued. “Access was exclusive. Today fashion shows are now blogged and broadcast all over the world via social media. By the time the merchandise ships many months later, the newness and excitement have worn off and in many cases the customer has moved on.”
