Neiman Marcus 2008 Annual Report Download - page 31

Table of Contents
categories are typically ordered three to six months in advance. As a result, inherent in the successful execution of our business plans
is our ability both to predict the fashion trends that will be of interest to our customers and to anticipate future spending patterns of our
customer base.
We monitor the sales performance of our inventories throughout each season. We seek to order additional goods to
supplement our original purchasing decisions when the level of customer demand is higher than originally anticipated. However, in
certain merchandise categories, particularly fashion apparel, our ability to purchase additional goods can be limited. This can result in
lost sales in the event of higher than anticipated demand of the fashion goods we offer or a higher than anticipated level of consumer
spending. Conversely, in the event we buy fashion goods that are not accepted by the customer or the level of consumer spending is
less than we anticipated, we typically incur a higher than anticipated level of markdowns, net of vendor allowances, resulting in lower
operating profits. We believe that the experience of our merchandising and selling organizations helps to minimize the inherent risk in
predicting fashion trends.
Fiscal Year 2009 Summary
We continue to experience a challenging economic and retail environment and expect these conditions will continue for an
extended period of time. Consistent with the significant declines in overall macroeconomic factors, capital markets and consumer
confidence that have existed during fiscal year 2009, customer demand has been well below our initial expectations and the prior
year. The current softness in customer demand exists across all geographic areas, all distribution channels and all merchandise
categories, particularly the apparel and home décor categories. We believe affluent customers are continuing to react to the economic
conditions mentioned above. However, based on our experience in previous business cycles, we believe our customers' buying levels
will increase once the economic environment improves.
In response to these challenging business conditions, we continue to take the following actions:
• stimulate sales through additional promotional and other events;
• reduce inventory levels and purchases;
• implement expense control initiatives; and
• review future capital expenditures and eliminate or postpone certain projects.
A summary of our operating results is as follows:
• Revenues— Our revenues in fiscal year 2009 were significantly impacted by a lower level of customer demand. As a
result, our revenues for fiscal year 2009 were $3,643.3 million, a decrease of 20.8% as compared to fiscal year 2008
reflecting a decline in comparable revenues of 21.4%. Comparable revenues decreased in fiscal year 2009 for both our
Specialty Retail stores and Direct Marketing operation.
Comparable revenues by quarter for fiscal year 2009 are as follows:
First fiscal quarter (14.5)%
Second fiscal quarter (22.8)%
Third fiscal quarter (25.1)%
Fourth fiscal quarter (23.4)%
Revenues in the 53rd week of fiscal year 2008 are not included in our calculations of changes in comparable revenues.
For Specialty Retail stores, our sales per square foot decreased to $475 for the fifty two weeks ended August 1, 2009
from $634 for the fifty two weeks ended July 26, 2008.
• Cost of goods sold including buying and occupancy costs (excluding depreciation)—COGS represented 69.6% of
revenues in fiscal year 2009 and 63.8% of revenues in fiscal year 2008. This increase in COGS was primarily due to 1)
lower levels of full-price sales and higher levels of net markdowns and promotional activities required to liquidate on-
hand inventories held in excess of sales trends for both our Specialty Retail
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