At Neiman Marcus, sales are down, markdowns are up and the dwindling presence of tourists is cramping the retailer’s style.
In repeating the broken record that’s been retail for the better part of this year, the luxury retailer blamed all but weather for what it called a “challenging” third quarter: the strong dollar, falling foot traffic, the fluctuation in oil price.
“As you know, we have a large presence of stores in Texas, two of our biggest are located in Dallas North Park Center and in the Houston Galleria where the economy and our customers’ business interests are heavily dependent on the oil and gas industry,” Karen Katz, Neiman Marcus president and CEO, said on the company earnings call.
But more than that, Neiman’s blamed it on the tourists.
Comp sales have been lower in key gateway markets that are heavily patronized by international tourists because the tourists aren’t coming, and when they do, they aren’t spending.
Total revenues for the third quarter ended Apr. 30 were down 4.2% to $1.17 billion and net earnings fell a whopping nearly 81 percent to $3.8 million from $19.8 million the prior year period. Same-store sales fell 5 percent.
Addressing the retailer’s poor quarter, Katz said, “While it is difficult to pinpoint the specific reasons why, our sense is that the overall economic outlook combined with uncertainty related to the continued fluctuations of the U.S. stock market and the upcoming presidential election are tempering our customers’ overall enthusiasm for shopping.”
She added, “The prevailing sentiment across retailing is that the customer has less interest in shopping in stores, whether it is traditional department stores or other luxury specialty stores.”
That’s part of the reason Neiman’s—as with other retailers—are battling with markdowns.
Katz said markdowns were higher than last year owed to the amount of inventory the retailer had to work through throughout the quarter.
The solution? Give goods back to the vendors.
“We have been working aggressively to align our inventory levels and purchases with anticipated future customer demand,” Katz said. Read: upping order cancellations, returning goods to vendors and negotiating additional markdown dollars. “We are making strong progress in this area.”
Inventories were up just 2 percent for the quarter compared to up 5 percent at the end of Q1 and Q2.
Websites are outperforming stores for Neiman’s, and as such the retailer is investing substantial sums to improve the online shopping experience. Katz said the focus for investments is on enhancing the customer experience. The retailer is testing faster checkouts, better search filters for items and product recommendations on the home page.