Neiman Marcus 2012 Annual Report Download - page 7

Table of Contents
growth and increased profitability. As a result, we believe that we are well-positioned to execute our growth strategies and continue to deliver superior financial
results.
Superior financial performance provides momentum for future growth
Our business model has allowed us to achieve strong financial results. Over the past three years, we have increased revenues from $4.0 billion to
$4.6 billion as of fiscal year 2013. During the same time period, we have consistently achieved positive quarterly comparable revenue growth with an average
quarterly increase in excess of 7%. During this period, we increased our operating earnings from $329.7 million to $446.4 million and our EBITDA from
$524.7 million to $635.3 million. These strong results and our efficient management of our working capital have allowed us to invest in high-return capital
projects and pay down debt. Our business generated strong cash flow from operations of $272.4 million in fiscal year 2011, $259.8 million in fiscal year
2012 and $349.4 million in fiscal year 2013. Our strong cash flow has allowed us to make approximately $1.2 billion in net long-term debt principal
repayments and dividend payments since October 2005. For fiscal years 2012 and 2013, our returns on invested capital were 19.8% and 19.0%, respectively.
Growth Opportunities
We operate in the luxury apparel and accessories segment of the retail industry and we believe the global luxury goods sector is a very attractive
segment of the overall apparel and accessories industry. In addition, we believe growth in the online distribution channel for global luxury goods will continue
to outpace the growth in the broader market. We believe that we are well-positioned to benefit from these trends. Our goal is to leverage our competitive
strengths and to increase our sales productivity and earnings growth to sustain our leadership position within luxury retailing. Subsequent to the closing of the
Future Sponsors’ Acquisition, if successfully completed, we will work with the Future Sponsors to define and implement growth strategies that are aligned
with and represent logical extensions of our core competencies of operating specialty retail stores and e-commerce websites within luxury retailing.
Components of Our Omni-channel Retailing Model
A description of the components of our integrated, omni-channel retailing model follows:
Specialty Retail Stores. Our specialty retail store operations (Specialty Retail Stores) consist primarily of our 41 Neiman Marcus stores and two
Bergdorf Goodman stores. Specialty Retail Stores accounted for 77.8% of our total revenues in fiscal year 2013, 79.8% of our total revenues in fiscal year
2012 and 81.1% of our total revenues in fiscal year 2011.
· 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 in major metropolitan markets across the United States. We design our stores to provide a feeling of residential luxury by
blending art and architectural details from the communities in which our stores are located.
· Bergdorf Goodman Stores. Bergdorf Goodman is a premier luxury retailer in New York City well known for its high luxury merchandise,
sumptuous shopping environment and landmark Fifth Avenue locations. Like Neiman Marcus, Bergdorf Goodman features high-end apparel,
handbags, fashion accessories, shoes, precious and designer jewelry, cosmetics, gift items and decorative home accessories.
· Small Format Stores. Also included in our Specialty Retail Stores segment are small format stores we operate under the Last Call and CUSP
brands. We operate 36 off-price stores under the Last Call brand. These stores offer off-price goods purchased directly for resale as well as end-
of-season clearance goods from our Neiman Marcus stores, Bergdorf Goodman stores and Online operation. In addition, we operate six stores
under the CUSP name. CUSP is a smaller store format (6,000 to 11,000 square feet) that targets a younger, fashion savvy customer with a
contemporary point of view. Sales from our Neiman Marcus Last Call and CUSP stores account for less than 10% of our total revenues.
Online. To complement the operations of our retail stores, our upscale direct-to-consumer retailing operation (Online) conducts online sales of
fashion apparel, handbags, shoes, accessories and home furnishings through the Neiman Marcus and Bergdorf Goodman brands and online sales of home
furnishings and accessories through the Horchow brand. Additionally, we operate a website under the Last Call brand that features off-price fashion goods and
augments and complements the operations of our Last Call stores. We also run an established online business for the CUSP brand which
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