Riding The Economic Storm Out
In these desperate economic times, there are those who remain boldly optimistic. Take Burton M. Tansky, chairman/CEO of luxury good cataloger/retailer Neiman Marcus, for example.
Despite the the fact that total October sales for his company dropped 25%, to $286 million, and nearly 13%, to $986 million for the first quarter ended Nov. 1, Tansky was surprisingly upbeat. “”As we have said, we expect retail demand will remain weak for an extended period of time as our affluent customer reacts to the continuing volatility of the financial markets,” he said in a release. “However, based on our experience in previous business cycles, we believe our customers’ buying levels will increase once the economic environment stabilizes.”
And just when might that be Burt?
Tansky added: “In response to the challenging business conditions, we continue to take actions to stimulate sales through additional promotional events and other activities which result in higher markdowns and related expenses. Further, we are focused on reducing inventory levels and implementing expense control initiatives. We have also reduced our fiscal year 2009 net capital expenditure plan to $100 million - $110 million compared to a previous plan of $135 million - $145 million.”
Tansky said the company’s business model was designed “in anticipation of a downturn in the economy. We believe our capital structure provides adequate liquidity to operate effectively in the current environment. The fall season represents the peak of our working capital needs. Despite this peak, we currently do not have any outstanding borrowings under our $600 million asset-based revolving credit facility and, at present, do not anticipate utilizing this revolver during the season.”
