Neiman Marcus 2014 Annual Report Download - page 12

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Table of Contents

The luxury retail industry is highly competitive and fragmented. We compete for customers with specialty retailers, luxury and premium multi-
branded retailers, national apparel chains, designer-owned proprietary boutiques, individual specialty apparel stores, pure-play online retailers and "flash
sale" businesses. We compete 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. Retailers that compete
directly with us for distribution of luxury fashion brands include Saks Fifth Avenue, Barneys New York, Net-a-Porter, designer boutiques and other national,
regional and local retailers. Nordstrom and Bloomingdale's feature a limited offering of luxury merchandise and compete with us to a lesser extent.
We believe we differ from other national retailers by our approach to omni-channel retailing, distinctive merchandise assortments, which we believe
are more upscale than other luxury and premium multi-branded retailers, excellent customer service, prime real estate locations, premier online websites and
elegant shopping environments. We believe we differentiate ourselves from regional and local luxury and premium retailers through our omni-channel
approach to business, strong national brands, diverse product selection, loyalty program, customer service, prime shopping locations and strong designer
relationships that allow us to offer the top merchandise from each designer. Designer-owned proprietary boutiques and specialty stores carry a much smaller
selection of brands and merchandise, lack the overall shopping experience we provide, have a limited number of retail locations and generally offer more
restrictive return policies.

As of September 15, 2015, we had approximately 15,100 full-time employees. Our staffing requirements fluctuate during the year as a result of the
seasonality of the retail industry. We hire additional temporary associates and increase the hours of part-time employees during seasonal peak selling periods.
Except for certain employees of Bergdorf Goodman representing less than 1% of our total employees, none of our employees are subject to a collective
bargaining agreement. We believe that our relations with our employees are good.

Our business, like that of most retailers, is affected by seasonal fluctuations in customer demand, product offerings and working capital expenditures.
For additional information on seasonality, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key
Factors Affecting Our Results—Seasonality.”

We own certain tradenames and service marks, including the “Neiman Marcus,” “Bergdorf Goodman” and "mytheresa" marks, that are important to
our overall business strategy. These marks are valuable assets that consumers associate with luxury goods.

The credit card operations that are conducted under our arrangements with Capital One are subject to numerous federal and state laws that impose
disclosure and other requirements upon the origination, servicing and enforcement of credit accounts and limitations on the maximum amount of finance
charges that may be charged by a credit provider. In addition to our proprietary credit cards, credit to our customers is also provided primarily through third
parties. Any regulation or change in the regulation of credit arrangements that would materially limit the availability of credit to our customer base could
adversely affect our results of operations or financial condition.
Our practices, as well as those of our competitors, are subject to review in the ordinary course of business by the Federal Trade Commission and are
subject to numerous federal and state laws. Additionally, we are subject to certain customs, anti-corruption laws, truth-in-advertising and other laws,
including consumer protection regulations that regulate retailers generally and/or govern the importation, promotion and sale of merchandise. We undertake
to monitor changes in these laws and believe that we are in material compliance with all applicable state and federal regulations with respect to such
practices.
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