Neiman Marcus Making a Big Bet on Online Luxury Shoppers

Despite plans to build its first store in New York City, the future of luxury department store chain Neiman Marcus may be online.

The Dallas-based Neiman Marcus is buying German e-commerce site MyTheresa.com and the company’s flagship Munich store for approximately €150 million. Neiman Marcus said MyTheresa.com and its brick-and-mortar store report annual revenue of about $130 million.

Wednesday morning, Neiman Marcus reported a net loss of $42.1 million for the fourth quarter of fiscal-year 2014, compared to net earnings of $2.9 million in the fourth quarter of fiscal-year 2013. For the full fiscal year 2014, Neiman Marcus reported a net loss of $147.2 million, down from net earnings of $163.7 million the year earlier. In October, 2013, Neiman Marcus was acquired by an investor group affiliated with Ares Management, L.P. and Canada Pension Plan Investment Board; significant debt was taken on as part of the sale process.

Despite the net loss, comparable revenues increased 5.5% from fiscal year 2013 to fiscal year 2014. Online revenue growth was particularly strong for Neiman Marcus, increasing 12.9% in that time period.

“The luxury customer is bouncing back – not at brick-and-mortar, but online,” said retail analyst Hitha Prabhakar. “So Neiman Marcus is keen to that … and is starting to snap up properties for the online business.”

Prabhakar added that the luxury market is increasingly international, making the acquisition of MyTheresa.com a smart move. Indeed, Neiman Marcus said in a statement that more than two-thirds of MyTheresa.com’s revenue comes from outside of Germany. The site ships high-end brands such as Balenciaga, Chloe and Christian Louboutin to over 120 countries.

Though Prabhakar applauded the acquisition and Neiman Marcus’ overall e-commerce strategy, she said the luxury retailer isn’t exactly leading the pack when it comes to online innovation. “To be honest, I think they’re a little late to the game,” said Prabhakar. Are they on the cutting-edge of trying to acquire international and online customers? No … But luxury is bouncing back, and they’re not so far behind that they won’t be able to catch up.”