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Financials Roundup: Neiman’s Led by Online Growth, Burlington Keeps Rolling Along, Madewell Helps Struggling J.Crew and Free People Helps Urban

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Neiman MarcusNeiman Marcus revenue is up on e-commerce initiatives and women’s, Burlington income surges on strong assortment and off-price model, Madewell boosts J.Crew’s top line and Free People leads Urban Outfitters.

Neiman Marcus

In a nutshell: Neiman Marcus is seeing early signs that its Digital First strategy is resonating with shoppers. The retailer recorded its biggest online comp growth on NeimanMarcus.com since 2015, bringing online sales up to 32 percent of total revenue. Similarly, Bergdorf Goodman’s e-commerce sales spiked by 25 percent, due to more merchandise availability and increased traffic. For the quarter, Neimans saw new customer growth of 22 percent online while Bergdorf’s digital sales achieved 55 percent new customer growth.

The retailer is testing ways to attract more online consumers and increase overall basket size. Already, Neiman’s says the value of shoppers who engage with their online stylists is 2.5 times higher than the typical digital shopper. Further, more than half become repeat customers.

Sales: Total revenue was up 3.8% to $1.12 billion during the first quarter ended Oct. 28, over $1.08 billion during the same period last year. Comp store sales were up 4.2 percent.

Gross margin improved by 40 basis points, which the retailer attributes to higher full-price in women’s apparel, bags and shoes, which all performed well in the quarter.

Earnings: The company reported a $26.22 million dollar loss, compared to a $23.51 million loss during the prior year period. Neimans attributes some of the increase to an increase in incentive compensation payments.

[Read more about Neiman Marcus: Neiman Marcus to Close 25 Percent of Last Call Locations]

CEO’s Take: Karen Katz, president and CEO, said, “As we moved into the fall season—the fall deliveries begin in basically in June/July—we saw a much, much better balance in our assortment. Even though they were fall-like clothes in terms of fall colorations, there were many, many great fabrications that people could buy and put on their back the same day so I think we’ve made a tremendous improvement with our vendors in this area and so we’re much, much less dependent on weather patterns and those kind of things. It’s one of the reasons why I think our women’s apparel business has improved because there’s a lot more buy-now, wear-now product.”

Burlington Stores

In a Nutshell: For the third quarter, Burlington Stores achieved a surge in income on sales growth, gross margin expansion, expense control and share repurchases. This was the company’s 19th consecutive quarter of positive comp sales growth, boosted by traffic growth in 11 of the last 13 quarters. The only real soft spot in the business studded with high performing categories was cold weather goods.

While comp store inventories overall were down 2 percent, pack-and-hold rose to 15 percent of overall inventory, up from 12 percent last year as the company capitalized on opportunities in better and best categories.

Burlington is bullish heading into the holidays for which it has focused its assortment around gift-giving. In its fourth year going after this business, Burlington has expanded into more categories with a focus on home and beauty.

The company’s full year guidance projects a sales increase of 8.1% to 8.4%, taking into account the hurricane-related store closures. Adjusted EPS is anticipated to fall between $4.23 and $4.27.

Sales: Sales increased by 7.1% in the third quarter ended Oct. 28 to $1.4 billion from $1.3 billion during the prior-year period.

Comp sales were up for the company by 3.1%, excluding 19 stores that were closed for a week or more related to the devastating weather.

Merchandise margin drove gross margin up 100 basis points to 42.2%.

Earnings: Net income increased 38 percent to $45 million or 65 cents per share, over $32.4 million or 45 cents during the same period last year.

CEO’s Take: Tom Kingsbury, CEO, said: “We believe our results this quarter demonstrate the agility of our business model. We drove operating results well above our expectations, and we remain confident in our growth initiatives and store expansion plans. We are confident in our outlook and believe in our focus on evolving our off-price model and our ability to capitalize on the rapidly changing retail landscape. This positions us well to bring more great brands, styles and value to our customers and increased value for our shareholders.”

J.Crew Group

In a Nutshell: The performance of the Madewell chain was a bright spot in a difficult quarter for J. Crew, along with a slight uptick in gross margin, as its signature chain continued to struggle. Sales and earnings were down for the company as a whole, and sales declines were seen in the J. Crew division and in group comparable store sales.

Sales: Total revenues in the third quarter ended Oct. 28 decreased 5 percent to $566.7 million from $593.2 million in the year-ago period. Comparable company sales fell 9 percent, following a decrease of 8 percent in the third quarter last year. J.Crew sales declined 12 percent to $430.4 million in the quarter, with the unit’s comparable sales decreasing 12 percent. Madewell sales increased 22 percent to $107.5 million from $88 million in the year-ago quarter. Madewell comparable sales increased 13 percent in the period.

Earnings: The company posted a net loss of $17.6 million compared to a loss of $7.9 million in the third quarter last year. Adjusted earnings before interest, taxes, depreciation and amortization increased 27 percent to $67.9 million from $53.3 million in the third quarter last year. Gross margin increased to 40.1% from 38.1% in the third quarter last year, while operating income was $24.7 million compared to $20 million in the year-ago quarter.

CEO’s Take: Jim Brett, CEO, said, “Our goal is to reinvigorate the J.Crew Brand to reflect the America of today and to continue to drive strong momentum in the Madewell brand. During the third quarter of fiscal 2017, we drove gross margin expansion and reduced SG&A by delivering on our expense initiatives. As we solidify longer term strategies, we will continue to leverage our strong brand equity and unique capabilities to expand our reach, accelerate growth and maximize profitability.”

Urban Outfitters Inc.

In a Nutshell: Urban Outfitters, which in addition to its namesake chain, operates brands such as Anthropologie and Free People, saw total sales rise in the third quarter, while the year-over-year decline in net income improved over the first half. Comparable sales, driven by e-commerce, also rose 1 percent. The company said without sales disruptions from the hurricanes in the southern U.S and Puerto Rico, comp sales would have increased 2 percent.

Sales: Overall net sales gained 3.5% grew to $892.8 million for the quarter ended Oct. 31, from $862.5 million a year earlier. By brand, comparable Retail segment net sales increased 5 percent at Free People, 2 percent at the Anthropologie Group and 1 percent at Urban Outfitters. Wholesale sales gained 8.7%.

Earnings: Net income in the quarter fell 4.9% to $45.1 million from $47.4 million in the year-ago period. For the nine months, net income declined 30.5% to $106.9 million compared to $153.8 last year.

CEO’s Take: Richard A. Hayne, CEO, said, “I am pleased to announce record third quarter sales, positive Retail segment comps at all three brands and another strong performance from Free People wholesale. Record sales were driven by improved apparel execution across all channels and brands.”

By Caletha Crawford and Arthur Friedman

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