NEW YORK (Reuters) - Upscale retailer Neiman Marcus Inc NMRCUS.UL reported a lower quarterly profit as consumers continued to avoid luxury items amid a slowdown the company expects will last for some time.
Chief Executive Burt Tansky said on a conference call on Wednesday that customers are still “measured and deliberate” because of uncertainty over the economic recovery.
Privately held Neiman Marcus, in a regulatory filing, cited “a challenging economic and retail environment” that was likely to persist for an “extended period of time.”
Sales at its namesake Neiman Marcus and Bergdorf Goodman stores open for at least a year, or same-store sales, fell 14.9 percent during its fiscal first quarter, ended on October 31. That follows a drop of 15.8 percent in the same quarter of 2008.
Overall comparable sales, including its direct marketing segment, declined 13.7 percent in the first quarter.
Luxury retailers such as Neiman Marcus and Saks Inc SKS.N have lowered inventory levels to avoid having to slash prices as they had to last year, but have felt pressure to broaden their selections to reflect the more modest means of many shoppers. That decision carries some risk to their image as high-end, luxury stores.
Despite moves to ramp up the company’s mid-price and entry-price merchandise, which will be more visible in stores by spring, Tansky said there would be no drastic shift in the company’s offerings.
“We have no intention of changing our business model or trading down,” Tansky said on the call.
The downward sales trend of the past two years has continued in the current quarter.
Last week the company reported same-store sales at its Neiman Marcus and Bergdorf Goodman stores fell 12.7 percent in November, a period that includes the busy holiday shopping weekend after Thanksgiving.
The two chains account for about 83 percent of the company’s revenue.
Tansky said store traffic picked up in November and that “aspirational” shoppers were coming back, though most of the improvement in business came from its traditional, affluent shoppers.
Neiman Marcus experienced weak demand across all geographic areas, and its apparel and home decor categories were particularly hard hit, according to the filing.
Neiman Marcus revenue in the fiscal first quarter fell 11.9 percent to $868.9 million.
The company reported a net profit of $8.5 million, down from $12.9 million a year earlier.
Neiman Marcus said its comparable inventories were 22.5 percent lower in the quarter than a year earlier.
Neiman Marcus was acquired by an investor group led by Texas Pacific Group and Warburg Pincus LLC in October 2005.
Additional reporting by Nivedita Bhattacharjee in Bangalore; Editing by John Wallace and Steve Orlofsky