Neiman Marcus Has Q4 Loss, Sales Pickup

by MR Magazine Staff

NEW YORK – Burdened with costs related to its 2005 acquisition, Neiman Marcus Inc. registered a fourth-quarter loss.

The net loss for the three months ended July 29 was $42 million, divided between losses of $27.5 million from continuing operations and $14.5 million attributed to discontinued operations. In last year’s quarter, the predecessor company, Neiman Marcus Group, had net earnings of $34.3 million. Operating earnings declined more than half to $20.7 million from $46.8 million but were off less dramatically – to $38.5 million from $40.6 million – on an adjusted basis.

Net sales, however, grew 8% to $915.5 million from $839.8 million in the fourth quarter of last year. Comparable revenues increased 6.6 percent.

Dallas-based Neiman Marcus Group was acquired by an investor group led by Texas Pacific Group and Warburg Pincus LLC last October for $5.1 billion. As a result, last year’s fourth-quarter figures are those of its predecessor company. Full-year figures reflect those of the predecessor company for fiscal 2005 and a combination of the predecessor and the new firm, Neiman Marcus Inc., for fiscal 2006. Like under its previous public ownership, the firm is one of the few retail concerns to close its books at the end of July rather than the end of January.

The quarterly and annual numbers do not utilize generally accepted accounting principles (GAAP) but were issued to provide “a more meaningful method of comparison.” Fourth-quarter results include a number of non-cash extraordinary costs, such as a $18.2 million for the amortization of customer lists and favorable lease commitments. Those notwithstanding, the company reported that operating earnings for its specialty stores, which include Bergdorf Goodman, dropped to $31.3 million in the quarter from $34 million one year ago. Direct marketing operating earnings, however, rose to $151.3 million from $133.6 million.

Revenues at its stores were up 8.5% to $745.9 million while those of the direct marketing unit advanced 13.2% to $151.3 million.

For the year, net income declined to $56.6 million from $248.8 million while sales crossed the $4 billion mark, ahead 8.8% to $4.1 billion. Comparable revenues were up 6.8%. Adjusted operating earnings were $450 million against $418.1 million in fiscal 2005.