Luxury retailer Neiman Marcus laid off 500 corporate and support staff late last week, eliminating the retail jobs of about 3 percent of its workforce of 16,000, as it tries to cut costs to pay for new stores and acquisitions. The employee cutbacks will affect retail jobs across all stores, divisions and facilities.
The layoffs were spread throughout the company, including company distribution facilities. As part of the restructuring, all of the single-unit loss prevention managers were cut around the country according to multiple LP sources. Loss prevention store team members will now report to store operations. The cuts were made with no previous notice. Members of the regional loss prevention staff had previously been centralized and moved to the corporate offices in Dallas. None of the cuts involve sales staff.
Founded over 100 years ago, Neiman Marcus is one of the largest omni-channel luxury fashion merchants in the retail industry, with about $4.8 billion in revenues for fiscal year 2014, of which approximately 24% took place online. The company offers a distinctive selection of women’s and men’s apparel, handbags, shoes, cosmetics and precious and designer jewelry from premier luxury and fashion designers to its loyal and affluent customers “anytime, anywhere, any device.” The company operates 41 full-line stores in marquee retail locations in major U.S. markets.
The management decision comes just two months after the Dallas-based chain filed an initial public offering to raise as much as $100 million.“A key part of this is about reinvestment back into the business,” claims Karen Katz, president and chief executive officer of the Dallas-based company. “Essentially, we did our strategic plan a number of months ago…One of the initiatives is called ‘organizing for growth,’ which is about improving ways to run our business to allow us to accelerate investments in customer-facing initiatives.”
Katz states that the re-organization will allow Neiman Marcus to invest in growth initiatives such as the acquisition last year of German online retailer MyTheresa and new and remodeled stores. The retailer, which also owns Bergdorf Goodman and the Last Call outlet chain, is planning to open two new stores in the New York area, including its first ever Manhattan namesake store, among other retail initiatives. Katz also hinted that “there is a possibility” of additional acquisitions, but she did not specify what kind would be most likely.
Recently the company reported that comparable sales for its most recent full year grew 3.9% and that online sales had risen to 26.3% of sales, retail statistics that trend far above other department store rivals. But despite revenue of $5.1 billion, they reported a modest profitof $14.9 million for the year. Neiman Marcus carries long-term debt of $4.55 billion, on which it paid $289.9 million in interest last year.
“Even as we adjust our course, our mission is unchanged,” Katz said. “Every employee of Neiman Marcus Group has a single focus: our customer. We remain dedicated to serving them by offering the most incredible luxury and fashion merchandise in the world’s most beautiful stores and dynamic websites.”