Neiman Marcus 2008 Annual Report Download - page 5

Table of Contents
PART I
ITEM 1. BUSINESS
Business Overview
We are 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 41 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®. During fiscal years 2009, 2008 and 2007, we generated revenues of $3,643.3 million, $4,600.5
million and $4,390.1 million, respectively, and operating (loss) earnings of $(652.9) million, $466.4 million and $476.8 million,
respectively.
We operate an integrated, multi-channel retailing model as described below:
Specialty Retail. Our specialty retail store operations (Specialty Retail) consist primarily of our 41 Neiman Marcus stores
and two Bergdorf Goodman stores. Specialty Retail accounted for 82.1% of our total revenues in fiscal year 2009, 83.8% in fiscal year
2008 and 83.7% in fiscal year 2007.
• 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 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. We also operate 28 clearance centers offering end-of-season clearance
goods from our Neiman Marcus stores, Bergdorf Goodman stores and direct-to-consumer operations as well as clearance
goods purchased directly for resale by our clearance centers. Our full-line Neiman Marcus stores and clearance centers
accounted for 69.7% of our total revenues in fiscal year 2009, 71.2% in fiscal year 2008 and 71.6% in fiscal year 2007
and 84.9% of Specialty Retail revenues in fiscal year 2009, 85.0% in fiscal year 2008 and 85.6% in fiscal year 2007.
• 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, decorative home accessories, precious and designer jewelry, cosmetics and gift
items. Our Bergdorf Goodman stores accounted for 12.4% of our total revenues in fiscal year 2009, 12.6% in fiscal year
2008 and 12.1% in fiscal year 2007 and 15.1% of Specialty Retail revenues in fiscal year 2009, 15.0% in fiscal year
2008 and 14.4% in fiscal year 2007.
We currently operate 6 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. To date, the operations of the CUSP stores are insignificant to
the revenues and operating earnings of our Specialty Retail stores.
Direct Marketing. Our upscale direct-to-consumer operation (Direct Marketing) conducts online and catalog sales of fashion
apparel, accessories and home furnishings through the Neiman Marcus brand, online and catalog sales of home furnishings and
accessories through the Horchow brand, and online sales of fashion apparel and accessories through the Bergdorf Goodman brand. In
addition, Direct Marketing currently operates 9 designer websites. In connection with the designer websites, Direct Marketing creates
and/or maintains separate e-commerce sites bearing the designers' brand names. Direct Marketing procures inventory from each
designer to be showcased on that designer's website and bears all the responsibilities related to the fulfillment of goods purchased on
the designer website.
Direct Marketing generated 17.9% of our total revenues in fiscal year 2009, 16.2% in fiscal year 2008 and 16.3% in fiscal
year 2007. Over one million customers made a purchase through one of our websites or catalogs in fiscal year 2009. In recent years,
internet revenues have increased as a percentage of Direct Marketing revenues. As a percentage of total revenues of Direct Marketing,
internet revenues were 79.5% in fiscal year 2009, 75.5% in fiscal year 2008 and 69.7% in fiscal year 2007. Our catalog business
circulated approximately 68 million catalogs in fiscal year 2009, a decrease of approximately 25% from the prior year. With the
growth of internet revenues, we have reduced catalog circulation in recent years and would expect flat to
2