Neiman Marcus is breaking up with off-price, a major step on the road toward attracting true luxury shoppers and doubling down on the more lucrative full-line business.
It’s one of many sweeping changes afoot at the Dallas-based department company, which embarked on a series of “transformation growth initiatives” in August 2018. At the time, the plan called for the luxury group, which also owns Bergdorf Goodman, to strengthen customer relationships, cultivate a seamless omnichannel experience and create “magic” for customers.
The strategic decisions announced Wednesday represent Neiman Marcus Group’s commitment to driving “accelerated profitable and sustainable growth with actions focused on growing [the] luxury customer base and driving full-price selling,” the company said.
CEO Geoffroy van Raemdonck said the firm is “taking deliberate steps today to align Neiman Marcus’ in-store and online teams, revisiting how we deploy our resources by investing in our supply chain, and streamlining Last Call.”
Most of the company’s 24 Last Call off-price retail doors are on the chopping block, which will eliminate 500 Last Call store jobs over the next eight months. A handful of doors will remain in operation to serve as a channel to clear out residual Neiman Marcus inventory, the company said, adding that the move will allow it to “free up resources to invest in Neiman Marcus and Bergdorf Goodman.”
Staffing and new responsibilities
The luxury retailer will also shed roughly 250 management and non-selling positions from its core department store business, culling a small percentage of its 15,000 employees on top of the 100 jobs lost through layoffs and attrition in November.
Some whose jobs are affected may qualify for new roles that focus on team and client management, with a goal of bolstering the omnichannel customer journey to increase customer lifetime value.
David Goubert will expand his role as chief retail officer and lead this component of the retailer’s evolution, the company said. Goubert will oversee the sales associates’ transition to “trusted client advisors,” armed with new state-of-the-art digital clienteling tools. The new roles will focus on client services, whether through dining experiences or wardrobing, to deepen and personalize the customer relationship, Neiman said.
“We are operating from a place of strength with a loyal luxury customer base, dedicated retail experts, a solid store footprint, and a growing online presence,” Goubert said. “Bringing our stores and online teams together and equipping them with the best leadership, tools and support positions us to deliver on our commitment to building long-term, deep customer relationships.”
Two distribution centers up for sale
Neiman said it has already initiated a sale process for two Texas distribution centers in Longview and in Las Colinas. “The anticipated reinvestment in the company’s supply chain will ensure the company remains on the cutting edge of product distribution. This is in addition to investments already made to the company’s West Coast distribution center resulting in an on average four- to five-day speed-to-market improvement,” Neiman said.
The money situation
Neiman is said to be exploring its options for its luxury fashion e-commerce platform Mytheresa.com, which it reportedly would like to sell. The company also operates designer home furnishings business concept Horchow and a young, contemporary chain of boutiques, Cusp. While Horchow is part of Neiman’s direct marketing business, Cusp maintains a presence in several Neiman stores. The company also operates Manhattan’s two Bergdorf Goodman stores.
The shift in consumer shopping patterns hasn’t been kind to Neiman, nor has the debt load it carries from a 2005 leveraged buyout by a pair of private equity firms, Texas Pacific Group and Warburg Pincus. In October 2013, the two financial sponsors sold the company for $6 billion to Ares Management and the Canada Pension Plan Investment Board. While Neiman flirted with the idea of an initial public offering in 2015, sluggish sales sank hopes for an IPO, which was subsequently pulled a year later.
In the past few years, Neiman has struggled to surmount shrinking sales, instead looking to an endless cadence of promotions to move inventory. Last fall, the company inaugurated a long-awaited Manhattan flagship in the Hudson Yards retail destination.