There are changes ahead at the Neiman Marcus Group as the luxury retailer continues to revamp parts of its business in pursuit of profitability.
On Wednesday, the company announced that it would wind down its off-price business, closing most of its 22 Last Call stores and eliminating about 500 positions within the division over the next eight months. It will also lay off about 250 non-selling associates across all stores.
The cuts won’t, however, represent a workforce reduction, NMG CEO Geoffroy van Raemdonck told FN sister publication WWD. Some Last Call workers may be transferred to other parts of the company, while those that are laid off will be eligible for severance and outplacement services, and can apply to open positions elsewhere in the company. NMG also plans to create some new roles in team and client development.
“This is not a reaction to anything happening in the economy now. It’s a strategic decision to redeploy resources,” van Raemdonck said, emphasizing the group’s efforts to become the premier multi-brand seller in full-price luxury retail.
The company, which operates the department store chains Neiman Marcus and Bergdorf Goodman, luxury e-tailer MyTheresa and furniture retailer Horchow, axed fewer than 100 positions at its Dallas headquarters in November, laying off some workers and eliminating some vacant roles. In recent years, it has struggled against industry-wide headwinds, such as traffic declines and online competition, as well as a heavy debt burden stemming from a 2013 private equity buyout.
With more than $4 billion in long-term debt, the group has been exploring different strategies to raise cash, including a potential sale or IPO of its MyTheresa business.
Its latest move is part of the group’s four-year transformation plan announced in August 2018, which has seen it invest in omnichannel and supply chain technology and embrace resale through a minority investment in consignment company Fashionphile, which specializes in pre-owned designer handbags and accessories. Nordstrom and Macy’s are among the company’s competitors that have since announced resale programs.
As it winds down its off-price business to focus on full-price selling, NMG said, it won’t buy new inventory specifically for Last Call, but it will continue to stock the stores with unsold inventory from Neiman Marcus and Bergdorf Goodman. A small number of stores will remain open after the closures as true outlets.
NMG will also close two distribution centers in Texas — one in Longview and another in Las Colinas — to help fund its investments in product distribution, and it will deploy new digital clienteling tools in stores. The latter will enable store associates to become what the company is calling “trusted client advisers,” guiding customers through all stages of the shopping experience, regardless of channel or category.
David Goubert, NMG’s Chief Retail Officer, will oversee this shift, leading both in-store and online teams.
“We are operating from a place of strength with a loyal luxury customer base, dedicated retail experts, a solid store footprint and a growing online presence,” Goubert said in a statement. “Bringing our stores and online teams together and equipping them with the best leadership, tools and support positions us to deliver on our commitment to building long-term, deep customer relationships.”