Bergdorf Goodman Company - Research Paper Example

[Supervisor’s Bergdorf Goodman Company report Overview: Bergdorf Goodman is a department store for luxurygoods located in the heart of New York City in Manhattan and was founded in 1899. The company offers the finest merchandise from the world’s most popular designers. It operates only two stores, which are situated across the street from each other, and it caters those customers who prefer only the best products. It has over 1,100 employees working for the organization as of 2011 and the company is a subsidiary of ‘The Neiman Marcus Group’ (The Neiman Marcus, Inc). History: The company was originated in 1899 when Herman Bergdorf who was a Frenchman, opened up a tailor shop in Manhattan. Edwin Good who was then a merchant in New York, came to Manhattan to work as an apprentice for Bergdorf. When almost two years passed Goodman had raised enough money to purchase the store from Goodman and moves to a location where it stands today and named the store ‘Bergdorf Goodman’ in 1901. Goodman was the first couturier to introduce ready-to-wear fashion in 1914, which became very popular (The Neiman Marcus, Inc). Gradually Goodman started to purchase the stores nearby and expended its business throughout the street and acquiring the entire block in 1930. Goodman was awarded as the ‘Legion of Honor’ from France and after that he retired as the most accomplished merchant of his time in 1953. Goodman’s son Andrew assumed the position of President and continued to expand its product range (The Neiman Marcus, Inc). The company expanded its business of up to $1 million in beauty salon and bridal services and in the year 1967 the investment of $2.5 million doubled the size of the store. In 1980, Bergdorf Goodman was taken over by Neiman Marcus and Contempo Casuals to form Neiman Marcus Group. The group expanded the business in to a restaurant and a café in which lunch and afternoon tea is served. In 2005, two equity firms acquired Neiman Marcus Group (The Neiman Marcus, Inc). Mission of the Company: The mission of the Company is to become a premier luxury retailer in providing our customers with unique needs and with superior services. The focus is to serve the affluent customers with distinctive merchandise with a commitment stronger than ever. Our aim remains to maximize the perception of brand exclusivity and alleviate the sales of goods at premium prices (The Neiman Marcus, Inc). Earnings/Financials: Financial Information for 5 years 2011 Quarters Total sales ($M) 1st and 2nd Quarter 2099 3rd and 4th Quarter 1904 2010 1st and 2nd Quarter 1971 3rd and 4th Quarter 1721 2009 1st and 2nd Quarter 2065 3rd and 4th Quarter 1578 2008 1st and 2nd Quarter 2506 3rd and 4th Quarter 2044 2007 1st and 2nd Quarter 2335 3rd and 4th Quarter 2055 Source: (The Neiman Marcus Group) Earnings: (In millions) July August Specialty Retail stores $272.5 $124.3 Direct Marketing $112.6 $73.3 Corporate Expenses $(58.1) $(52.1) Other Expenses $(21.9) $(22.5) Amortization of intangible assets and favorable lease commitments $(73.3) $(72.7) Impairment Charges - $(703.2) Total operating earnings (loss) $231.8 $(652.9) Source: (The Neiman Marcus, Inc) Operating earnings for the specialty stores were $272.5 million and the revenues for the August 2009 was $124.3 million. The increase in the operating margin was due to the low net markdowns and higher customer demands and sales. Higher incentives and compensation and increment in the marketing and advertisement cost were also the reason for higher operating margin (The Neiman Marcus, Inc). Product Portfolio: Bergdorf Goodman deals with all kinds of luxury goods including bridal services, salon and spas, restaurant services. Shoes: Boots and booties, pump shoes, wedges, flats and sandals. Jewelry: Earrings, bracelets, rings, necklaces and timepieces. Beauty and fragrance: Eyeliner, eyelash curlers, lipstick, cleansers, eyebrow enhancers, false eyelashes, powder eye shadow, eye makeup remover, moisturizers, conditioner, shampoo, sun care, pencils and gloss. Accessories: Sunglasses, scarves, hats, gloves, belts, wraps and handbags (The Neiman Marcus, Inc). Management Philosophy: Neiman Marcus was considered to be the one who invented the customer experience management because the company never had the desires of making money but to be the best in the specialty retail stores. In order to achieve the target, the company made the customers their sole priority. Records of the customers are kept in the database to monitor the activities of their customers such as their birthdays, anniversaries etc. the company hires only those sales associates that would have an impeccable taste and could read the minds of the customers. Due to these reasons the company could maintain consistency with the services offered (The Marcompass). The company treats its employees with great respect and that is the reason why the satisfaction rate of both the employees and the customers is very high. They empower the employees and give them great opportunities to learn the environment. The company cares for its assets and that is why Bergdorf Goodman earns a lot of respect (The Marcompass). Distribution: Bergdorf Goodman has over 400 merchandise planners and buyers. The company utilizes the primary distribution facilities in Texas and a regional distribution facility in New Jersey. In order to support the direct marketing operations, the company operates two distribution facilities in Dallas-Fort (The Neiman Marcus, Inc). The distribution network is linked electronically through electronic data interchange (EDI) to the merchandising staffs in order to distribute the goods in the stores. This electronic program helps in selling the floor cost effectively and quickly. The company also uses automated conveyor systems which can easily scan the cartons and label the bar codes. Then the merchandise is ‘cross docked’ to the shipping are where it is ready for the delivery to the stores. Third party carriers are used to deliver the goods to the stores (The Neiman Marcus, Inc). The majority of the merchandise is kept in the stores and in case of higher demand, additional shipment is sent directly to the stores. The sales associate of the company can also use the program to ship a product directly to the customers, which improves their customer service and increases productivity. It helps to operate the shop more efficiently and maximize the opportunity of premium price selling to the potential customers and minimize the risks involved (The Neiman Marcus, Inc). Employee opportunities: The company has over 1,100 employees and the number fluctuates every year while the number increases in the peak season time. Bergdorf Goodman value its customers give them rewards of their high performance. It encourages its employees for exciting opportunities and helps them in developing their careers through training them and sending their employees to gain knowledge in order to deal with the customers. It aims to motivate customers by giving them awards like Achievers, Merchant of the year and top 100 sales executives. It motivates its sale associates through a comprehensive benefit packages, which helps them in attaining their desired goals (The Neiman Marcus, Inc). Annual and Health incentives: If an employee exceeds the target that had been assigned to each individual then employees would be paid incentives based on the target percentages. The employees are offered with health and welfare benefits, which includes dental, medical, life insurance and disability (The Neiman Marcus, Inc). Stock options: The ‘fair value’ option that has been approved by the compensation committee is awarded with respect to the employee’s promotions, and terms and conditions of their contract. The stock option vests 25% on the first anniversary date when employee joins the organization and the rest becomes exercisable after thirty-six months (The Neiman Marcus, Inc). Retirement Plans: Employees that are over age 21 and have completed at least one year with the organization can take part in the retirement plan, which pays benefits upon retirement. Each year an employee earns an annuity equal to one percent of its compensation (The Neiman Marcus, Inc). Market Price of Company’s Stocks: There are two stocks traded on the New York stock exchange, which are class ‘A’ common stock and class ‘B’ common stock (The Neiman Marcus, Inc). The last day trading of the stock before the merger of Neiman Marcus, the closing price was $98.32 per share in 2005. As of 2005, there were 9250 registered holders of Neiman class ‘A’ stocks and 3180 registered holders of class ‘B’ stocks. The new stock options that have been issued have initial exercise price of $1000 per share (The Neiman Marcus, Inc). Subsidiaries: Bergdorf Goodman is the subsidiary of ‘The Neiman Marcus Group’, which is comprised of specialty retail stores including two retail chain, ‘Bergdorf Goodman’ and ‘Neiman Marcus stores’. The company deals with numerous divisions including Jewelry, decorative homes, apparels, beauty products and accessories. The company is operating 41 Neiman Marcus stores and 2 Bergdorf Goodman stores (The Neiman Marcus, Inc). NAICS and SIC: The code the company follows of North American Industry classification system (NAICS) is 4225, 5136, and 5137. The code the company follows for Standard Industrial Classification (SIC) is 493110, 424330, and 424320 (The Neiman Marcus, Inc). Key people in Organization Name Designation Karen W. Katz President and Chief Executive Officer James Gold President, Specialty Retail. John Koryl President, Neiman Marcus Direct. James E. Skinner Executive Vice President, Chief Operating Officer and Chief Financial Officer Nelson A.  Bangs Senior Vice President and General Counsel Phillip L. Maxwell Senior Vice President and Chief Information Officer Wayne Hussey Senior Vice President, Properties and Store Development Wanda Gierhart Senior Vice President, Chief Marketing Officer Stacie Shirley Senior Vice President, Finance and Treasurer Dale Stapleton Senior Vice President, Chief Accounting Officer Source: (The Nieman Marcus Group) Works Cited The Marcompass. "Managing the customer experience isn’t new, Neiman-Marcus has been doing it for 100 years." 26 October 2009. www.themarcompass.com. 05 April 2012 . The Neiman Marcus Group. "Invertor Relations." 2012. http://phx.corporate-ir.net. 05 April 2012 . The Neiman Marcus, Inc. Annual report pursuant to section 13 and 15(d). Annual Report. New York: Thomson Reuters, 2011. The Nieman Marcus Group. "Investor relations." 2009. phx.corporate-ir.net. 04 April 2012 . 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