News Column

Neiman Marcus CEO Outlines Conservative Expansion Plan

January 14, 2014

NEW YORK , Jan. 14 -- The International Council of Shopping Centers issued the following news release: Karen Katz , president and CEO of Neiman Marcus Group , quelled industry speculation that the iconic Dallas -based luxury chain would expand internationally after its recent purchase by private equity. Speaking at a "fireside chat" at the Weitzman Group's 24th annual Shopping Center Survey and Forecast Breakfast on Wednesday, Katz said Neiman Marcus plans no international store growth, even though it enjoys a lucrative delivery trade to 100 countries. "My greatest dream would be to have stores across the world but it would be very difficult to envision that in the short term," she said. "That would be the hardest thing we could ever try to pull off." Katz, who oversees 41 full-line Neiman Marcus stores, in addition to Last Call by Neiman Marcus , Bergdorf Goodman , Horchow, Cusp and the chain's lucrative e-commerce trade, said the company will continue its domestic strategy of being "very selective" about sites, with only one new full-line store slated to open on Long Island in 2016 at Simon Property Group's Roosevelt Field mall. However, she did note that the brand has room for seven to eight more full-line stores eventually. The company does plans several more Last Call stores, she said, including one at the redeveloped Riverwalk Marketplace in New Orleans , which is rebranding itself The Outlet Collection at Riverwalk. After serving as CEO of Neiman Marcus Stores beginning in 2002, Katz took the reins of the full Neiman Marcus Group in late 2010 when the luxury market was staggering in post-recession America. While other luxury retailers changed their stripes in the downturn, during which time Neiman took a $900 million sales-volume hit, "one of the things we were committed to was not trading down," she said. "We didn't, and our brand came out better than when we went in." After seriously considering an initial public offering, the Neiman Marcus Group was sold by TPG and Warburg Pincus in October 2013 for $6 billion to Ares Management and the Canada Pension Plan Investment Board . The new private-equity owner ha $4.6 billion in debt on its balance sheet and Katz said the retailer will be charged with deleveraging some of that. "It's no easy feat to manage that, but we understand how and expect to do well," Katz said. "Even though we're highly leveraged, I am very happy we are owned by private equity because the pressure of a public company are greater than a public one." Neiman Marcus was among the first in the industry to develop an e-commerce trade and that niche now accounts for a whopping 22 percent of the retailers' sales and more than $1 billion in revenues, she said. The average Neiman Marcus multichannel shopper spends four times as much as the store-only shopper, said Katz, adding that all 5,000 of the company's associates are equipped with iPhones "and they're constantly communicating with customers." While Texas is an "amazing" market for Neiman Marcus , "south Florida is even better," Katz said. Sales have soared at Neiman's newly renovated store in Bal Harbour, Fla. , she said. Weitzman Group chairman and CEO Herb Weitzman , who was interviewing Katz at the event, mentioned recent trips with his wife to Grapevine Mills Mall to shop at Neiman's Last Call. That prompted Katz to playfully chide him, "Surely, Herb, you can afford to shop at a full-line Neiman Marcus . I know you like a good bargain but please!" Meanwhile, the red-hot Dallas retail trade area ended 2013 at 90.02 percent occupancy, a one percent increase over 2012 and the first time the market has hit that threshold since 2004. "Much of the remaining 10 percent [of space) is virtually obsolete," said Bob Young , Weitzman's managing director. At the 55 1980s-era centers polled in Weitzman's survey, vacancies stood at an average of more than 40 percent, Young said. In contrast, 17 of the market's 20 regional malls reported vacancies of under 5 percent. "The DFW area is one of the most dynamic in the country," said CEO Weitzman. Noting center construction stood at historic lows in 2013, Weitzman believes new Dallas -area construction is imminent. "Money is cheap and there is demand for new space." TNS 24 HARIcha-140115-30FurigayJane-4601542 30FurigayJane


For more stories on investments and markets, please see HispanicBusiness' Finance Channel



Source: Targeted News Service


Story Tools