Neiman Marcus Group CEO Geoffroy van Raemdonck presented to Wall Street on Wednesday, which is an interesting move for a privately held company.
Two years after completing a bankruptcy reorganization during a pandemic, Van Raemdonck and chief financial officer Katie Anderson outlined the 115-year-old retailer’s recent progress.
“I’m more excited than I’ve ever been in my tenure over the four and a half years that I’ve been the CEO of the company,” van Raemdonck said at the Goldman Sachs 29th Annual Global Retailing Conference. “I think we operate in a market that is growing. We have a strategy to revolutionize the luxury experience, which is exactly meeting the customer needs today.”
The Dallas-based luxury retailer’s appearance on a roster with publicly traded companies such as Lowe’s, Dick’s Sporting Goods and Macy’s was an effort to share its recent success and growth strategy “with the wider financial community,” a company spokesman said. The retailer is owned by three of the biggest wealth funds on Wall Street: PIMCO, Davidson Kempner Capital and Sixth Street.
The company wouldn’t say whether the appearance means it’s considering a return to the public markets.
Farfetch, a publicly traded company, invested $200 million in Neiman Marcus in April and became a minority owner. Farfetch has a platform that will allow the Neiman Marcus to expand its international online sales faster than it could alone.
The last time Neiman Marcus appeared at Goldman Sachs retailing event was in 2004. The next year it was sold to private equity, and it’s been private ever since. Van Raemdonck and Anderson are presenting again on Sept. 14 at the Piper Sandler Technology and Consumer Growth Frontiers Conference.
Van Raemdonck made the case that the company, which operates 36 Neiman Marcus stores, Bergdorf Goodman in Manhattan, five Last Call clearance centers and e-commerce platforms, is a “relationship business.”
Many luxury brands go directly to consumers with their own stores and online platforms, but customers don’t always know what they want to buy, he said. Neiman Marcus’ 3,500 sales associates aren’t “constrained to push one brand or another,” and that differentiates the business.
Luxury brands want to be in the retalier’s stores because of its customer relationships, he said. About 80% of its top customers have a net worth of at least $1 million, and 2% of the company’s customers drive 40% of its revenue. The 2 percenters spend an average of $27,000 a year with the retailer, he said, adding, “We retain 90% of them.”
Sales from the retailer’s top 20 brands — including Akris, Alexander McQueen, Balenciagia, Bruno Cucinelli, Burberry, Chanel, Christian Louboutin, Dior, Prada, Tom Ford, Valentino and Yves Saint Laurent — are up 60% compared with 2019.
Neiman Marcus is now profitable, can reinvest its cash flow in the business and has more than $1 billion in liquidity, van Raemdonck said. Comparable store sales were up 30% last year, and the value of merchandise sold was $5 billion. That’s not total company revenue because it includes sales from vendor shops, but it is a level similar to annual sales of Neiman Marcus before the bankruptcy. The comments didn’t include specific financial results.
Neiman Marcus exited bankruptcy in late 2020 after shedding $4 billion in debt accumulated from private equity-led leveraged buyouts and reducing its annual interest expense by $200 million. It also closed seven Neiman Marcus stores, 17 Last Call stores and shut down its outlet division.
Anderson said the company plans to spend $200 million remodeling stores over the next three years, and about half of that will be contributed by landlords.
Neiman Marcus purchased a minority stake in ultra-luxury pre-owned retailer Fashionphile in 2019 and was the first retailer to invest in the luxury resale business. It has since opened branded shops inside its Neiman Marcus stores to make it easier for its customers to sell back their handbags for cash or Neiman Marcus credit.
Fashionphile is another way to extend the relationship with the customer, van Raemdonck said. By helping customers clean out their closets, “we see exactly what they have, what they own from us what they own from others, and we can now guide them into what’s missing.”
Unlike some of the retailers presenting at the annual event, Neiman Marcus doesn’t see inflation as a big issue.
“Luxury is a pretty good place to be right now,” Anderson said. “Our customer is a very affluent customer. There was a lot of wealth created during the pandemic, and a lot of that was disproportionately in the more affluent levels of the consumer.”