High-End Retailers Post Strong Sales

March 5, 2004

High-End Retailers Post Strong Sales

Neiman Marcus announced same-store sales increases of 9.2% over a year ago at its Neiman Marcus stores for the second quarter ended in January, citing fine jewelry as one driver of sales. Neiman Marcus' February same-store sales were even better, checking in at almost 25% better over the same period in 2003. Same-store sales increases at Saks in February were almost 15% over a year ago as well. Saks said fine jewelry sales were strong at its Saks Fifth Ave. stores, while fashion jewelry was soft.

"By any measure, our performance this quarter was outstanding," said Neiman's CEO Burt M. Tansky on a conference call with analysts and investors. "This fall season exceeded our expectations on every level. I believe the success we enjoyed this quarter validates our long-term strategy of not trading down and of maintaining the highest standards for customer service, merchandise and fashion leadership.

"Very importantly, our continued focus on selling merchandise at regular price supported by innovative marketing and advertising programs are paying off. This emphasis enabled us, for example, to eliminate the after-Thanksgiving sale and allowed us to reduce the level of markdowns after Christmas ... The affluent customer is currently shopping and buying with great enthusiasm. During the quarter we saw this enthusiasm throughout the country in our Neiman Marcus stores and at Bergdorf Goodman in New York City," said Tansky.

The executive also cited good inventory management as a reason for continued strong sales, according to Women's Wear Daily. Tansky said the chain worked hard with top vendors and designers to keep assortments exciting and tried to have spring deliveries shipped early. Must-have items helped Neiman justify non-sale prices and differentiated the stores from their competitors.

Other higher-end retailers citing strong sales included the Banana Republic division of Gap and Ann Taylor, with 30% and 15% same-store sales increases cited for February over a year ago. Discount retailers did less well, with Wal-Mart's February same-store sales up 6% and Target's sales up 7.5% over the same period last year. The National Retail Federation's Executive Opinion Survey for February was also up almost 20 points over the same period a year ago. "Retail executives are telling us that consumers continue to shop and buy," said Tracy Mullin, NRF president and CEO. The February Current Demand Index, an average of sales and traffic, increased 1.7 percentage points compared to January 2004. Retail executives continue to be confident that the economy will maintain its current growth.

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