Neiman Marcus 2004 Annual Report Download - page 5

PART I
ITEM 1. BUSINESS
Business Overview
The Neiman Marcus Group, Inc. (the Company), is one of the nation's leading luxury retailers, offering distinctive merchandise and excellent customer
service that cater to the needs of the affluent consumer. Since our founding in the early 1900s, we have established ourselves as a leading fashion authority
among luxury consumers and have become a premier U.S. retail channel for many of the world's most exclusive designers. Currently, we operate 35 Neiman
Marcus full-line stores at prime retail locations in major U.S. markets and two Bergdorf Goodman stores on Fifth Avenue in New York City. We also operate
catalogs and e-commerce websites under the brands Neiman Marcus®, Bergdorf Goodman® and Horchow® and own majority interests in Kate Spade LLC,
which designs and retails high-end accessories, and Gurwitch Products, LLC, which designs and markets Laura Mercier® cosmetics. During 2005, we
generated revenues of $3,821.9 million.
We operate an integrated, multi-channel retailing model as described below:
Specialty Retail Stores. Our specialty retail store operations (Specialty Retail Stores) consist primarily of our 35 Neiman Marcus stores and two
Bergdorf Goodman stores. We also operate 17 clearance centers to provide an outlet for the sale of end-of-season clearance merchandise. Over our past five
fiscal years, Specialty Retail Stores has achieved a compounded annual growth rate, or CAGR, in revenues of 4.9%. During 2005, Specialty Retail Stores
accounted for 81.2% of our total revenues and generated operating earnings of $377.8 million, or 12.2% of Specialty Retail Stores revenues.
Neiman Marcus Stores. Neiman Marcus stores offer distinctive luxury merchandise, including women's couture and designer apparel,
contemporary sportswear, handbags, fashion accessories, shoes, cosmetics, men's clothing and furnishings, precious and designer jewelry,
decorative home accessories, fine china, crystal and silver, children's apparel and gift items. We locate our Neiman Marcus stores at carefully
selected venues that cater to our target customers in major metropolitan markets across the United States and design our stores to provide a
feeling of residential luxury by blending art and architectural details from the communities in which they are located. During 2005, our full-line
Neiman Marcus stores and clearance centers accounted for 70.4% of our total revenues and 86.8% of Specialty Retail Stores revenues.
Bergdorf Goodman Stores. Bergdorf Goodman is a premier luxury retailer in New York City well known for its couture merchandise, opulent
shopping environment and landmark Fifth Avenue locations. Bergdorf Goodman features high-end apparel, fashion accessories, shoes, traditional
and contemporary decorative home accessories, precious and designer jewelry, cosmetics and gift items. During 2005, our Bergdorf Goodman
stores accounted for 10.7% of our total revenues and 13.2% of Specialty Retail Stores revenues.
Direct Marketing. Our upscale direct-to-consumer operation (Direct Marketing) conducts catalog and online sales of fashion apparel, accessories and
home furnishings through the Neiman Marcus brand, catalog and online sales of home furnishings and accessories through the Horchow brand, and online
sales of fashion apparel and accessories through the Bergdorf Goodman brand.
In 2005, Direct Marketing generated revenues of $592.1 million with over one million customers making a purchase through one of our catalogs or
websites. Our catalog business circulated over 100 million catalogs and generated revenues of $279.0 million. Our online business generated revenues in 2005
of $313.1 million. We regularly send e-mails to over 1.7 million e-mail addresses, alerting our customers to our newest merchandise and the latest fashion
trends. Over the last five fiscal years, Direct Marketing has achieved a CAGR in revenues of 7.9%. During 2005, Direct Marketing accounted
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