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Neiman Marcus' sales declined in the third quarter amid a broader pullback in luxury spending, its CEO Geoffroy van Raemdonck tells Axios.

Why it matters: While spending has held up overall, consumers are increasingly shifting their dollars from items to experiences, even when it comes to luxury.

By the numbers: Neiman Marcus remains profitable, however, with EBITDA as a high single-digit percentage of revenue and with some $1 billion in liquidity, van Raemdonck says.

Revenue for the quarter ended April 29 declined 9% to about $1 billion, while EBITDA decreased 25% to $124 million, store sales declined 5%, and net leverage stood at 3.2x, Bloomberg reported.

Details: While Neiman Marcus has seen a decline in year-over-year results, it continues to pace well ahead of pre-pandemic spending, up 11% over a similar period in 2019, van Raemdonck says.

While the luxury shopper has faded due to inflation and spending more on travel, Neiman's top customers increased their spending by 25%, he says.

Its stores' sales are up 16% and the sales for its top 50 brands are up 39%, compared with pre-COVID levels, he says.

The most recent quarterly numbers are being compared to a time last year when shoppers unleashed pent-up demand, with more recent sales trends showing a return to normalization, he adds.

Zoom in: The decline in profit is due to promotions to reduce excess inventory, van Raemdonck says, noting it's a temporary slump.

Yes, but: The strategy that focuses on the most loyal customers and stores is working, the CEO says.

State of play: Neiman Marcus isn't the only retailer experiencing a decline in sales as consumers rein in spending.

Nordstrom, Neiman Marcus' closest competitor whose results are public, revealed that net sales decreased 11.6% in Q1.

Ralph Lauren reported that Q4 revenue in North America was down 3%, while Capri (the parent of Versace) noted that sales across brands were down in the Americas, and luxury conglomerate Kering (the parent of Gucci) stated that revenue was also down in North America,

Even luxury giant LVMH said sales in North America were holding steady, though Tapestry (the parent of Coach) said its revenue increased 5% overall, bucking the trend.

Meanwhile, a report by the New York Post recently surfaced that Neiman Marcus is once again exploring its exit options, specifically selling Bergdorf Goodman.

The CEO declined to comment, noting the company's investors remain committed to the business, investing $300 million since 2021.

"I think we're very focused on doing what's right with the business," he adds, noting Neiman is expanding its supply chain, as well as working on store renovation, a new app, and a new corporate hub to support the business.

Be smart: A source tells Axios that the shareholders will look at a monetization opportunity, but there's no time frame attached to it.

Selling Neiman Marcus is a matter of when, not if — especially given investors Pacific Investment Management Company (PIMCO), Sixth Street and Davidson Kempner bought the company's debt at a steep discount and converted it to equity through a bankruptcy restructuring.

Note that Farfetch acquired a minority stake in the business last year, with JPMorgan serving as Neiman Marcus' financial adviser.

💭 Richard's thought bubble: Selling a business piecemeal is not in a distressed investor's playbook — the most logical exit plan keeps the business together.

Reality check: Regardless of the timing, Neiman Marcus' shareholders stand to make a healthy return on their investment.

Neiman Marcus' sales decline amid broad luxury spend pullback

Meanwhile, an exit by the retailer's investors is a matter of when, not if.

A Neiman Marcus sign in Garden City, N.Y.  Photo: Bruce Bennett/Getty Images

Luxury goods

Neiman Marcus&#x27; sales declined in the third quarter amid a broader pullback in luxury spending, its CEO Geoffroy van Raemdonck tells Axios.Why it matters: While spending has held up overall, consumers are increasingly shifting their dollars from items to experiences, even when it comes to luxury.

Neiman Marcus' sales decline amid broad luxury spend pullback

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