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Top Brands Propel Neiman’s Post-Bankruptcy Strength

Neiman Marcus disclosed this week some general, broad strokes on how its performing following the end of its fiscal fourth quarter in July and its emergence from Chapter 11 bankruptcy protection in September 2020.

While the luxury retailer is no longer a publicly-listed firm, it does disclose financial results to its owners and bond holders.

Neiman’s ended its fourth quarter with 6 percent comparable-sales growth compared with the same quarter in 2019. The 6 percent comps growth drove over 800 basis points of margin expansion before fresh-start adjustments, which led to a strong adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) margin of 10 percent for the quarter. Fresh-start adjustments reflects the company’s accounting reporting upon its exit from bankruptcy proceedings. In addition, the company posted comparable online sales growth of 7 percent versus the same quarter in fiscal 2019.

Similar to other retailers, Neiman’s has benefited from the macro tailwinds stemming from pent-up demand.

“We believe our deliberate actions earlier in the year enabled us to fully capitalize on the strong momentum we saw in the business, such as buying with agility and chasing into key customer categories driving full-price selling, promotion reductions and eliminations, markdown shifts to capture the extended full-price selling windows, as well as the exit of our off-price business to focus on high-quality luxury customers,” the company said.

The luxury retailer in March 2020 decided to shut most of its Last Call off-price business.

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Neiman’s, which reduced its inventory by 21 percent from 2020 levels, also said it saw continued sequential acceleration as it focused on full-price selling.

By category, Neiman’s saw strong performance in women’s shoes, men’s, and designer handbags, as well as sequential improvement in women’s fine and contemporary apparel.

The company said it’s top 20 luxury brands have been a source of strength for the business. In the fourth quarter, those top 20 brands grew nearly 50 percent on a comparable basis when compared with the same quarter in fiscal 2019.

The retailer in June acquired Stylyze, a machine learning software-as-a-service platform in what is the first of several future digital investments, according to the company. The retailer plans to spend nearly $500 million in investments over the next three years to support its integrated luxury strategy.

Neiman’s said it ended the fourth quarter with total liquidity, including cash and revolver availability, of $959 million. At the end of July, the company had total outstanding debt of $1.1 billion, compared with $5.7 billion in 2020. In addition, net of cash on hand, Neiman had net debt of $700 million at July 2021, compared with $5.1 billion in the same 2020 period. The reorganization during the bankruptcy process allowed Neiman’s to wipe out roughly $4 billion in pre-petition debt, with no near-term maturities. The restructuring of debt also gave Neiman’s some much needed breathing room, as well as eliminated more than $200 million of interest expense annually.

Seperately, the company on Wednesday began its holiday campaign, “Celebrate Big, Love Even Bigger.” As part of its holiday launch, the retailer also unveiled its 2021 Christmas Book.

“Just like our customers, we are incredibly excited and grateful for everything this holiday season has to offer and are taking none of it for granted,” Lana Todorovich, Neiman’s president and chief merchandising officer, said. “There is plenty to feel joyful about, and we wanted to channel that into “The Christmas Book” and our “Celebrate Big” campaign for our customers to experience with us. From our assortment of extraordinary gifts—including legendary Fantasy Gifts—to our in-store gifting lounges and experiences, we’re prepared to help our customers make this one of the most special holidays as we return to celebrating in person again with our families and friends.”