Neiman Marcus 2002 Annual Report Download - page 6

The Company has stores operating under the name The Galleries of Neiman Marcus in Cleveland, Ohio and Phoenix, Arizona. The
Galleries of Neiman Marcus feature precious and fashion jewelry, gifts and decorative home accessories to extend the Neiman Marcus
brand into markets that may not be large enough to support full-line stores.
The Company operates two Bergdorf Goodman stores in Manhattan at 58th Street and Fifth Avenue. The main Bergdorf Goodman
store consists of 250,000 gross square feet and features high-end women's apparel and unique fashion accessories from leading
designers, traditional and contemporary decorative home accessories, precious and fashion jewelry, cosmetics, gifts and gourmet
foods. The Bergdorf Goodman Men's store consists of 66,000 gross square feet and is dedicated to fine men's apparel and accessories.
The Company operates fourteen clearance centers that average approximately 27,000 gross square feet. These stores provide an
efficient and controlled outlet for the sale of end-of-season clearance merchandise primarily from Neiman Marcus stores and Neiman
Marcus Direct. Additionally, the Company purchases off-price merchandise directly from existing vendors to supplement the
assortments of the clearance stores.
Direct Marketing. Neiman Marcus Direct, the Company's upscale direct marketing operation, conducts catalogue and online sales
through three brands — Neiman Marcus, Horchow and Chef's Catalogue. Under the Neiman Marcus brand, Neiman Marcus Direct
primarily offers women's apparel, accessories and home furnishings. The Horchow brand offers quality home furnishings, linens,
decorative accessories and tabletop items, while the Chef's Catalogue brand offers gourmet cookware and high-end kitchenware.
Neiman Marcus Direct also operates the NeimanMarcus.com, Horchow.com and ChefsCatalog.com websites, offering luxury goods,
home furnishings and high quality cookware to the online consumer.
Brand Development Companies. The Company owns a 51 percent interest in Gurwitch Products, LLC, which distributes and markets
the Laura Mercier cosmetic line, and a 56 percent interest in Kate Spade LLC, a manufacturer and retailer of high-end designer
handbags and accessories.
Competition
The specialty retail industry is highly competitive and fragmented. The Company competes with large specialty retailers, traditional
and upscale department stores, national apparel chains, designer boutiques, individual specialty apparel stores and direct marketing
firms. The Company competes for customers principally on the basis of quality and fashion, customer service, value, assortment and
presentation of merchandise, marketing and customer loyalty programs and, in the case of Neiman Marcus and Bergdorf Goodman,
store ambiance. The Company competes with other retailers for real estate opportunities principally on the basis of its ability to attract
customers.
Vendor Relationships
The Company competes for quality merchandise and assortment principally based on relationships and purchasing power with
designer resources. The Company's apparel and fashion accessories businesses are especially dependent upon its relationships with
these designer resources.
The Company obtains certain merchandise, primarily precious jewelry, on a consignment basis in order to expand its product
assortment. As of August 2, 2003, the Company held consigned inventories with a cost basis of approximately $214.0 million. From
time to time, the Company makes advances to certain of its vendors. These advances are typically deducted from amounts paid to
vendors at the time merchandise is received or, in the case of advances made for consigned goods, at the time the goods are sold by
the Company. The Company had net outstanding advances to vendors of approximately $30.8 million at August 2, 2003.
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