Neiman Marcus: Even Strong Sales Growth Can't Boost Earnings

Last week, privately held Neiman Marcus reported surprisingly good sales results for the first quarter of its 2018 fiscal year. Unfortunately for the embattled luxury retailer's bondholders and private equity owners, the results didn't translate into stronger earnings.

Indeed, Neiman Marcus remains far behind larger rival Nordstrom (NYSE: JWN) in terms of profitability. Meanwhile, the company is struggling under a mountain of debt. Neiman Marcus' first-quarter performance shows that even if sales recover, the company has little chance of repaying its creditors in full.

Over the past two fiscal years, Neiman Marcus fell into a deep rut. A combination of falling mall traffic and operational missteps led to sharp declines in comparable-store sales. Comp sales declined 4.1% in fiscal 2016 and 5.2% in fiscal 2017.

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Source: Fool.com