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Neiman Marcus Q4 loss widens on debt-related expense as sales rise 11%

BY Katherine Boccaccio

Dallas — Neiman Marcus Group reported a fiscal fourth-quarter loss on debt-related expense and slightly lower margins, even as its revenue rose 11%.

For the quarter ended July 30, Neiman Marcus lost $61.4 million, compared with a year-earlier loss of $32.8 million. Excluding a $42.7 million after-tax loss on debt extinguishment, the adjusted loss was $18.7 million. Gross margin narrowed to 30.5% from 30.9%.

Sales rose 11% to $919.7 million. Same-store sales rose 11%. Similar to other upscale marketers, Neiman Marcus has seen its sales rise the past year as post-recession wealthy shoppers resumed their spending. But industry experts warn that ongoing economic uncertainty and stock market volatility could begin to eat into sales going forward.

For the year, Neiman Marcus earned $31.6 million, compared with a loss of $1.8 million in the previous year.

Annual revenue increased 8% to $4 billion, and same-store sales rose 8.1%.

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Best Buy Q2 profit drops 30%, misses Street

BY Katherine Boccaccio

Minneapolis — Best Buy Co. reported Tuesday that net income for the quarter ended Aug. 27 plummeted 30% to $177 million from $254 million a year earlier, missing Wall Street expectations.

Sliding same-store sales have undercut the electronic retailer’s performance as a still-soft economy continues to take a toll on electronics purchases. Revenue for the quarter edged up 0.01% to $11.35 billion, missing Wall Street’s estimate of $11.47 billion, and same-store sales declined 2.8%. The same-store dip marked the fifth consecutive quarter of same-store sales declines.

Best Buy has been proactive about cutting costs, previously announcing an innovative plan to scale back its big-box retail space by subletting square footage to other retail concepts. It also is working to grow its online and mobile businesses.

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Kroger invests in value

BY CSA STAFF

CINCINNATI — Consumer sentiment toward the economy continues to be negative, acknowledged David Dillon, Kroger chairman and CEO, a factor that may drive many consumers toward more of the value-driven store brands in which Kroger is investing.

"The sluggish economy continues to strain household budgets while increasing consumer anxiety," Dillon said. "In fact, customers tell us their expectation for the economy are more pessimistic now than at any time this year."

Corporate brands at Kroger certainly are on the rise. Kroger enjoyed 34% penetration in grocery department units sold for the second quarter ended Aug. 13, representing 27% of all grocery sales. "When you look at these trends compared to our first-quarter results, corporate brand dollars and total units each increased by 100 basis points," Kroger president and COO Rodney McMullen. "Our multibillion dollar corporate brand portfolio is a competitive advantage because it gives our customers more choices and variety and value to complement the broad assortment of national brand products we offer. This is particularly important today as many shoppers continue to watch expenses and look for quality items at affordable prices."

Inflation may be another factor forcing many consumers to take a closer look at store brands. The industry is continuing to pass along inflationary increases, including Kroger. "We will continue to pass along product cost increases from suppliers. At the same time, we will continue to invest for the future in pricing, people, products and customer shopping experience."

That means stocking that customer’s marketbasket with more margin-friendly store brands has become increasingly important, McMullen said. "Customers are even more value conscious when they shop, are buying smaller baskets and are selecting some lower-cost items, including our low — our corporate brand products. This has made the value we offer our customers through lower every day prices, weekly promotions and personalized rewards to loyal households even more compelling."

During Kroger’s discussion of second-quarter results with analysts last week, the Cincinnati-based grocer announced it would be expanding its selection of Big K brands soda flavors, including apple, pineapple, passion fruit, watermelon, kiwi, blackberry, citrus and mandarin.

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