Neiman Marcus swings to a loss as Hudson Yards store debuts
- Neiman Marcus on Tuesday reported second quarter results showing total revenue dropped to $1.39 billion from $1.48 billion in the year-ago quarter. Comparable sales, however, increased 0.7% from the year-ago period, which had seen a 6.4% rise, according to the company's investor documents.
- The company reported a net loss of $29 million, down from net earnings of $372.5 million in the year-ago quarter. Adjusted EBITDA was $134.4 million, down from $154.8 million in the year-ago quarter.
- The luxury department store retailer also this week is opening its first Manhattan location in the new Hudson Yards development. The 188,000-square-foot store features product, services and dining options, according to a separate press release.
Neiman Marcus wants to become a luxury customer platform, and that means serving "all luxury customers' desires," CEO Geoffroy Van Raemdonck said on a conference call Tuesday. In order to make good on that promise, he said 2019 will be a year of investment. The company is banking on its "ignite to win" turnaround plan to drive total sales to $700 million in adjusted EBITDA within five years.
On the conference call, executives mentioned ongoing negotiations with creditors regarding a proposed three-year extension of the company's debt maturities. Total current liabilities are $810.2 million, but its long-term debt totals $4.46 billion, according to the company's most recent quarterly report. While a proposed deal was struck with creditors earlier this month, one creditor — Marble Ridge — rebuffed the plan. The hedge fund has an ongoing lawsuit against Neiman Marcus alleging the fraudulent transfer of its MyTheresa e-commerce business last summer.
This week the fund reached out with its own plan to extend the debt maturities by two years while taking a 75% preferred equity stake in MyTheresa, a person familiar with the matter told The Wall Street Journal. Under the still-pending plan, Neiman Marcus is only offering a 50% stake in the business, according to an SEC filing. On Tuesday, executives said they view the negotiations as a process that will take time.
In the meantime, the department store retailer is celebrating the opening of its first Manhattan store, which will open in the much anticipated Hudson Yards development, described in media reports as the largest and most expensive private real estate in U.S. history. Core to the mixed-use space is an affluent lifestyle, and Neiman Marcus is hoping to cash in on that with, among other things, a multi-level experiential store that offers "digital stylists" who connect with online shoppers, digitally-outfitted fitting rooms and the company's smart mirrors, which record beauty demonstrations and makeup tutorials. The space also features an art collection and several upscale restaurants.
These are the kinds of services and amenities that are likely to win over the luxury shopper. The question is: Will they go to other Neiman Marcus stores?
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