Can a financially stable, digitally-enabled Neiman Marcus make a comeback?

Photo: Neiman Marcus
Jun 17, 2021

Is Neiman Marcus ready to make its long promised comeback?

The luxury retailer, which emerged from Chapter 11 bankruptcy protection last September, is expressing confidence in improving its prospects as it has wiped away the debt load that weighed it down for the past 15 years, begun making strategic investments in digital technology companies and swung open the doors to its namesake department stores, Last Call off-price concept, Bergdorf Goodman and Horchow locations.

“Over the past year, we’ve been strengthening the foundation of our business. We knew the rebound was coming, and we’ve been experiencing the return of luxury as it accelerates,”  Geoffroy van Raemdonck, chief executive officer, Neiman Marcus Group (NMG), said in a statement.

Mr. van Raemdonck pointed to a dramatically improved balance sheet as finally putting the retailer in a position to invest in its own business. Neiman Marcus was forced to abandon stores last year, including its much heralded Hudson Yards location in New York, as its financial position went from bad to worse with the outbreak of the novel coronavirus pandemic.

Nearly nine months into its post-bankruptcy era, Neiman Marcus has cut its debt load from $5.1 billion to $1.1 billion. It also has over $850 million in available liquidity compared to $132 million a year ago.

The department store retailer reported that same-store sales from February through April were relatively in line with its performance during the same period in 2019. This put it ahead of its own internal forecast.

Neiman Marcus is actively seeking to make strategic investments in areas such as store renovations and digital technologies all in an effort to better serve the needs of its core older customers and, at the same time, attract younger affluents.

The company announced yesterday that it has reached a deal to acquire Stylyze, Inc., a machine learning SaaS platform that makes fashion merchandise recommendations based on past purchases and browsing activity of individual shoppers.

Stylyze has been working with Neiman Marcus since 2018 as a component of its CONNECT remote clienteling tool that enables sales associates to interact with customers online.  Over five million customer engagements and hundreds of thousands of orders have been placed since its launch.

Neiman Marcus, with 35 percent of total sales made online, plans to further integrate Stylyze’s technology into other areas as it seeks to create a seamless shopping experience for its customers.

DISCUSSION QUESTIONS: Is Neiman Marcus Group on the right financial and strategic path to establish consumer relevancy and achieve sustainable success? What do you see as opportunities and hurdles for NMG in the short- and medium-term?

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"The challenge, and opportunity, is to return to its position of luxury leadership,"

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16 Comments on "Can a financially stable, digitally-enabled Neiman Marcus make a comeback?"

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Mark Ryski

Neiman Marcus is making some progress, but their financial situation and consumer relevancy challenges remain – they still have a long way to go. It sounds like management is attempting to steer the business in the right direction, but the Neiman Marcus brand mystique of the past may never return.

Phil Rubin
Phil Rubin
Founder, Grey Space Matters
1 year 1 month ago

Can Neiman Marcus make a comeback? Absolutely, especially with a debt load that’s 80 percent lower than pre-pandemic. The challenge, and opportunity, is to return to its position of luxury leadership, which includes a compelling but differentiated merchandise assortment, a strong service culture and pricing discipline.

Neiman Marcus’s path toward bankruptcy was obvious way before COVID-19 in a way that would have made Stanley Marcus cringe. Its new leadership seems to be focused on many of the right things and let’s hope it can live up to its once legendary brand.

Ken Morris

If Neiman Marcus can fully leverage its Stylyze acquisition to help coach sales efforts in the stores, that will be huge. Especially if they can establish or maintain real-time inventory accuracy across their channels. Post-bankruptcy, Neiman Marcus will have to repair or establish new vendor relationships, but that’s already in their wheelhouse. If they focus on leveraging technology effectively throughout their supply chain and across their concepts, to curate a customer focused selection, they will thrive. Their customers will return to the stores; they just need to wow them as they have in the past.

Liza Amlani

NMG is not only on the right track with enabling technology as part of their digital strategy, but they are also focussed on merchandising and staying relevant with their luxury customers. These moves are aligned with NMG bringing on Aiken of Moda Operandi, a fresh perspective to the rebirth of Neiman Marcus in accelerating its growth with a focus on their loyal luxury customer.

Lee Peterson

The problem is not financial (pretty much all that was discussed), it’s this: Who is Neiman Marcus? A middle man for luxury apparel? And? I’d put my money on The RealReal all day long over an aging brand on a slippery slope. This is going to be some decade for retail’s dinosaurs — will massive change be possible? Or is it time for the kids to take over? I’m with the latter mindset.

Melissa Minkow

I agree! Their brand has suffered a bit of an identity crisis. Unless they can take a few pages from Nordstrom’s book, I just don’t see any department store retailer staying relevant much longer.

Gary Sankary

Neimans, as my aunts called it, is certainly an iconic brand in the luxury retail space. I think the brand is strong enough to survive successfully. In Texas at least they have a very loyal following that will support some version of the company. They’ve certainly made the right moves to improve their financial situation. That said, the future Neiman Marcus will not be nearly of the same stature they once were.

I would see them more as a niche player with a strong online presence and downsized stores that cater the very specific market where they are so strong. If they can continue to build on their brand of exclusivity and luxury that at the same time feels aspirational for the mid-market customers, I think they will be able to create a very nice segment in the market for themselves.

John Orr

I watched and talked with Neiman Marcus for over a decade off an on. What surprised me was its lack of investment in HCM systems and specifically WFM for coverage, efficiency in labor spend, and employee engagement in work-life balance. With the recoil in retail focused on updating systems, improving engagement, and flexibility, they would be prudent to dig deeper here for improved profitability, productivity, and brand engagement with their associates.

Cathy Hotka

A liberated Neiman Marcus, with universal name recognition and years of technology innovation, could be a powerhouse. The opportunity now is to craft a personalized customer outreach strategy that exceeds the competition’s. The potential is impressive.

Jeff Sward

Does Neiman Marcus have a future as a luxury department store — or as a luxury specialty store? Meaning, as the whole business migrates to a digital base, how many stores will Neiman Marcus need and how big will they need to be? The department store model of yesteryear is gone forever. The need to evolve to a digital base is obvious. Less obvious is what needs to happen to evolve the physical stores into the format that will best serve the business in 2025 and beyond.

Steve Dennis
As a former senior executive at Neiman Marcus it has been frustrating for me to see the damage that has been done over the years by an ill-fated PE buy-out and a failure to attract the modern luxury consumer. Neiman Marcus was slow to bust silos (see my comments elsewhere) and has struggled to balance its obsession with maximizing gross margin dollars with ueber-wealthy customers, with also attracting the significant numbers of younger, more accessible luxury customers it needs to be a profitable $4 billion plus brand. On top of that, the luxury market has become ultra-competitive with near-term headwinds from the COVID-19 hangover. NMG was hamstrung by its debt levels from making many of the changes they have need to make for more than a decade. They will certainly post much better numbers in comparison to 2020 and now have the financial flexibility to invest more aggressively. Yet I’m doubtful they can ever get remotely close to being back to the more than $600 million in EBIDTA (which would be closer to $700 million… Read more »
Shep Hyken

I’m excited that Neiman Marcus is going to stick around for a new era of retail. For NM to stay relevant, they will have to strengthen their digital experience. They know that. Today’s customer – even in the luxury retail sector – expects all the experience they’ve had in the past plus the convenience the digital era has thrust upon us. That was accelerated during COVID-19. NM must not only keep up, they must become a leader if they want to regain the stature they have enjoyed in the past.

Kai Clarke

Neiman is a dying breed — a dinosaur struggling in the tar pits. It is trying to survive using its old skills and measuring success by outdated metrics. Where are the omnichannel market initiatives for Neiman? Same-day shipping? Nimble retailing? Their growing online presence? They still have over $1 billion in debt!

Mel Kleiman

It is interesting to read all of the comments, and I have to agree with most of them that Neiman Marcus does have a chance for survival as a much more focused and smaller organization.

The two things I am not seeing are:

  1. What is their unique selling proposition? I am hearing nothing that makes them a unique offering to their customer.
  2. What is their unique employment proposition? To thrive in the upscale retail market takes more than technology. It takes superior customer service, which takes superior employees. I see no reason for that A player to come to work for them.
Craig Sundstrom

The hurdles are obvious (by the prominence they were given in the story): financial, IN ADDITION to all the “regular” (operational) issues that all soft goods retailers face; and much like Nordstrom, where much of focus is on expensive, “dress up” clothing, the ever-more-casual world doesn’t offer encouraging trends.

So I’m not overly optimistic. I’m still of the mind that it’s a legacy brand, so unthinkable that it will go away, but that’s what we often think … until it happens.

Keverne Denahan

I am a HUGE fan of Neiman Marcus. I have shopped there for years. I also worked at the SF store in the Bottega Veneta vignette. I think that if NM takes all of this tech, and goes back to their brand DNA, they can reclaim their status.

NM has always been niche. If they use that to their advantage and differentiate themselves with a luxury experience for the customer at every level and across every channel, then I think they can reclaim their status as a fabulous luxury retailer.

"The challenge, and opportunity, is to return to its position of luxury leadership,"

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