Neiman Marcus Group Ltd. LLC added its name to the list of department stores reporting sluggish earnings in the most recent quarter.
For the third quarter, the company reported total revenues of $1.17 billion, a 4.2 percent decline compared to revenues of $1.22 billion in the year-ago same period. Comparable sales also dipped 5 percent.
Neiman Marcus’ net earnings saw the most significant decline, plunging 81 percent, to $3.8 million, compared to $19.8 million during Q3 of the previous year.
While Macy’s Inc., Nordstrom Inc. and others also reported lackluster earnings recently, the sizable profit slip at Neiman Marcus has garnered a lot of attention.
Here are three reasons the department store chain’s profits suffered in Q3.
Watch on FN
The Oil Dilemma
While lower fuel costs might be good news for the everyday consumer, cheaper oil prices can be bad news for companies that cater to wealthy clientele.
According to Karen Katz, CEO and director at Neiman Marcus, fluctuating oil prices remain an ongoing issue for the firm.
“The fluctuating price of oil continues to materially affect our business,” Kats said during the company’s conference call Tuesday. “We have a large presence of stores in Texas; two of our biggest are located in Dallas, NorthPark Center and in the Houston Galleria, where the economy and our customers’ business interests are heavily dependent on the oil and gas industry.”
Election Year Anxiety
Another issue related to Neiman Marcus’ target demographic involves election year uncertainty.
While the excitement of an election tends to draw a variety of consumers away from leisure shopping as they turn their attention to candidate debates and political issues, wealthy consumers tend to get particularly anxious around this time.
The reason? There are usually a lot of questions surrounding whether an incoming president will raise taxes on the wealthy, which leads many to clench their pocketbooks a little tighter in advance.
Katz also cited election year uncertainty as a factor “tempering our customers’ overall enthusiasm for shopping.”
Tourism & The Stronger Dollar
The strength of the U.S. dollar against other major currencies continues to take a toll on Neiman Marcus and other firms that rely on tourist traffic in key markets such as New York, Las Vegas and Miami.
“We continue to experience lower comp sales in key gateway markets, those that are heavily patronized by international tourists,” Katz noted.
While in-store traffic has suffered recently, Katz added that business on its websites remained positive.
In October 2014, Neiman Marcus — which also owns Bergdorf Goodman — purchased luxury e-tailer MyTheresa.