Neiman Marcus Group Inc. (NMG/A), the luxury chain owned by Warburg Pincus LLC and TPG, said it will invest $28 million in a closely held Hong Kong e-commerce company in its first move into China’s luxury market.
Neiman Marcus plans to launch an e-commerce website in China with Glamour Sales Holding by the end of 2012, according to an e-mailed statement from the company today.
Karen Katz, who became CEO about 18 months ago, is turning to the world’s fastest-growing luxury-goods market to help the Dallas-based retailer recover its pre-recession sales volume. Besides the China venture, she has opened more U.S. stores, particularly discount outlets, and expanded the retailer’s social media marketing to attract younger customers.
Glamour Sales operates “flash sales” websites in Asia, with Glamour-sales.com.cn in China and Glamour-sales.com in Japan. Flash sales involve online retailers providing a limited- time offer of high discounts on exclusive items and have proven to be “tremendously successful” in the European and U.S. markets, Neiman’s statement said.
While China’s economic growth has been slowing, Asian demand for luxury goods still outpaces that of Europe and the U.S. Dozens of luxury brands including European names like Louis Vuitton and Chanel and American ones like Tiffany and Coach already are chasing Chinese consumers at home and abroad.
Not all efforts to enter the Chinese market have been successful. Rival Saks Inc. (SKS) announced a plan in 2006 for licensed stores in China that didn’t come to fruition.
Slow to Spend
Neiman Marcus hasn’t recovered all of the sales volume it lost during the U.S. economic downturn because so-called aspirational shoppers have been slow to increase their spending. The retailer reported revenue of $4 billion in its most recent full fiscal year, which ended in July, down from its peak of $4.6 billion in the year ended in mid-2008.
Neiman Marcus posted fiscal second-quarter profit of $40.1 million on sales of $1.28 billion in the three months ended Jan. 28.
Katz, 55, replaced Burton Tansky as chief executive officer in October 2010, 25 years after joining the company. Tansky remains as chairman. Private-equity firms Warburg Pincus and TPG bought the retailer for $5.04 billion in 2005.
Neiman Marcus operates 42 namesake stores, including one that opened on March 9 in Walnut Creek, California, as well as two Bergdorf Goodman locations.
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