In an era when off-price retail is thriving as consumers flock to brands like TJX, Ross Stores and Burlington, Neiman Marcus will be shuttering the majority of its 22 Last Call stores by October 2020. The remaining stores will remain open to serve as a selling channel for residual Neiman Marcus inventory, but the company has not indicated how many of the stores will serve this purpose or for how long.
Neiman Marcus referred to its “next phase of strategic transformation” in a statement, heavily emphasizing its goal to stay upmarket by growing its luxury customer base and focusing on driving full-price sales.
The retailer also has big plans to change the experiences available at its namesake stores, starting with changing the role of the store sales associate. The associates, which Neiman refers to as “client advisors,” will now be equipped with digital clienteling tools on the sales floor. Additionally, the retailer will create new roles at the store and regional levels that “transcend a single product transaction,” alluding to the fact that new associate skills will be tied to more experiential aspects of retail such as dining, client services, hospitality or alterations.
While the sales associate is getting a makeover, those not as involved with the customer aren’t as lucky. The retailer is laying off approximately 250 “non-selling associates” across all stores.
On the back end, the luxury retailer will streamline its in-store and online teams under one leader, Chief Retail Officer David Goubert, with dedicated teams focused on the omnichannel customer experience. This move is similar to Walmart’s recent integration of its U.S. online and store product buying teams into one merchandising team.
“We are operating from a place of strength with a loyal luxury customer base, dedicated retail experts, a solid store footprint and a growing online presence,” said Goubert in a statement. “Bringing our stores and online teams together and equipping them with the best leadership, tools and support positions us to deliver on our commitment to building long-term, deep customer relationships.”
With the closures, Neiman Marcus expects to eliminate approximately 500 roles in the Last Call organization over the next eight months. Some affected associates will be placed in other roles, while others will be eligible for severance, outplacement services and opportunities to apply for other open positions within the company. The layoffs come only four months after Neiman axed nearly 100 total employees.
Neiman has desperately sought to find ways to claw its way out of a massive $4.6 billion debt hole, having already restructured a deal that extends loan maturities to 2023 and 2024. The company set ambitious targets to pay off the debt — aiming to drive more than $5 billion in total sales and $700 million in adjusted EBITDA by 2024. Neiman Marcus, privately owned by asset manager Ares Management and the CPP Investment board, actually stopped reporting quarterly results publicly in June 2019 due to the significant debt load.
Neiman Marcus also revealed it is putting two distribution centers in Texas up for sale in an effort to further reinvest elsewhere in its supply chain.