Neiman Marcus Group is embarking on a series of digital and tech investments, totaling some $500 million over the next three years, starting with plans to acquire cloud-based software-as-a-service platform Stylyze. Terms of any deal, expected to close later this year, were not disclosed.
Founded by two women in the interior design field and based in Seattle, Stylyze offers "enterprise solutions to the home and fashion retail verticals," according to its website. In addition to Neiman Marcus, which said it first partnered with Stylyze three years ago, the platform works with Target, Build.com and Zulily, among others.
Neiman said it can afford these plans thanks to "renewed financial flexibility," derived from last year's bankruptcy restructuring and subsequent debt refinancing. At April's end, its outstanding debt was $1.1 billion, down from $5.1 billion a year ago. The company has liquidity of more than $850 million, up from $132 million a year ago, with no borrowings against a $900 million revolver, per its release.
Department stores, declining for decades now, are missing out on the retail recovery taking place as the pandemic wanes across much of the country.
In May, for example, even as apparel sales rose 13.1% from 2019, department store sales fell 1.7%. And while store traffic rose at off-price retailers in recent weeks compared to 2019, traffic fell at department stores, according to a client note from Morgan Stanley analysts citing Placer.ai data.
Against this backdrop, Neiman Marcus wasted no time recharging its e-commerce focus shortly after exiting bankruptcy last year. The retailer's existing digital efforts also came in handy all last year as it swiftly expanded a tech-enabled remote styling service pilot in order to stay in communication with customers during the pandemic.
"We are capitalizing on our momentum and reimagining how we look at omnichannel," CEO Geoffroy van Raemdonck said in a statement. "We're focused on creating an integrated luxury retail experience that spans our premium store footprint, largest U.S. luxury e-Commerce platform, and our differentiated remote-selling channel powered by our clienteling tool, CONNECT."
That momentum includes, compared to 2019, "recent double- and triple-digit growth ... for our top luxury brands" and flat comps during March and April, the company said Tuesday. Its third quarter results "were generally ahead of plan and showed signs that the business has begun to return to pre-pandemic levels with a strong e-commerce business, accounting for approximately 35 percent of revenue," the company also said.
Once Stylyze and Neiman Marcus finalize their deal, the platform would shed its other clients, a company spokesperson said by email. That means the department store wouldn't benefit from the kind of outside revenue stream that Target gets from Shipt. Stylyze's team would remain at their Seattle headquarters and work remotely, the spokesperson also said.
Editor's note: This story has been updated to provide additional details about the companies' plans.