As it continues to chart a path for revamping its business, Neiman Marcus said today that it ended its six-quarter comparable sales winning streak.
Following back to back quarters of gains in same-store sales — which had signaled the previously struggling chain was finding its way — the high-end department store posted a third-quarter comparable sales decline of 1.5 % with revenues of $1.1 billion.
Neiman Marcus also widened its net losses to $31.2 million from $19.9 million in the same year-ago quarter. It joins a growing list of department stores — including Nordstrom, Kohl’s and JCPenney — posting disappointing results as they struggle with soft foot traffic, merchandising misses, unseasonable weather and other challenges during the period.
Nevertheless, CEO Geoffroy van Raemdonck, touted the Dallas-based firm’s long-term strategy — which has seen it make new moves to diversify its business, including snapping up a minority stake in online consignment company Fashionphile, which specializes in pre-owned designer handbags and accessories. (Neiman Marcus became the first major luxury retailer to directly invest in resale — a sector that is expected to grow to $23 billion by 2023, according to a recent ThredUp report.)
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“We continue to drive innovation and are making long-term investments in technology and customer centric capabilities that will both enrich the shopping experience and position the company for long-term growth” van Raemdonck said today in a statement.
Among the positives for the company — currently saddled with about $5 billion in debt, much of which stemmed from a 2013 private equity buyout — also announced today that it has reached a settlement of its previously announced exchange offers. The new refinancing plan will see Neiman Marcus’ loans reach maturity in 2023 and 2024 — instead of 2020 and 2021. In order to strike the deal, Neiman Marcus had made a unique offer to its existing lenders that would leave those that didn’t take it more vulnerable to losses should the company go bankrupt. Now, the company expects to use the extended timeline to grow its business. According to the Wall Street Journal, in a presentation to lenders earlier this year, Neiman Marcus said its debt exchange would give it more time to increase its annual adjusted EBITDA, by roughly 50% to at least $700 million in the next five years.
The retailer’s Q3 adjusted EBITDA was $126.5 million compared to $143.8 million for the third quarter a year ago. Excluding MyTheresa, U.S. adjusted EBITDA was $126.5 million compared to $143.1 million for comparable period.
Neiman Marcus, which acquired MyTheresa in 2014, said in an April U.S. Securities & Exchange filing that it has “commenced a process to explore and evaluate strategic alternatives” for the Germany-born luxury online retailer.
“No decision has been made to pursue any specific transaction or other strategic alternative, and there can be no assurance that the exploration of strategic alternatives will result in the completion of any transaction,” the group stated in the filing.