New York Post

RIDING FOR A FALL

Neiman inventory snafu creates vendor crisis

- By LISA FICKENSCHE­R lfickensch­er@nypost.com

Neiman Marcus is flying blind.

The struggling luxury retailer, which has recently admitted to having a tough time coaxing its loyal customers into its stores, is running into trouble with its vendors, The Post has learned.

Some vendors have become irked and have lost confidence in the chain since the stores’ new computer merchandis­ing system failed last summer.

The snafu with the system has left Neiman — and its Bergdorf Goodman operation — unable to verify inventory, it has said.

Operating in a fog, Neiman has been putting pressure on its suppliers to determine when it should restock its stores and discount its merchandis­e, vendors complained in interviews with The Post.

Neiman, when caught by surprise with excess inventory, has asked some vendors to buy back some of their unsold goods — without the benefit of a system that gives the vendors accurate informatio­n, they said.

“The informatio­n they send us is inaccurate and the onus is on us to prove how much of our product they sold,” said one agitated vendor who did not want to be identified. “We lost sales in December because Neiman didn’t know it had sold out of our product.”

A second vendor, who also spoke on the condition of anonymity, said it has not received a sales report from Neiman in about five months.

Neiman traces its inventory and merchandis­ing problems to last August, when it moved to upgrade its 40-year-old system.

Instead of helping, the upgrade has cost Neiman up to $35 million in lost sales, the company said last month during an earnings call, and management said the snafus would continue for the foreseeabl­e future.

“I know many of our clients are trying to get the data they got in the past [from Neiman] and it’s been much more difficult,” said Gary Wassner, chief executive of Hilldun Corp., a lender to the fashion industry. “They don’t know how well their products are doing.”

Neiman can hardly afford to miss a single sale, as its financial performanc­e worsens by the month. It’s turned in five consecutiv­e quarters of declining sales.

“They have lost total visibility of their business,” said Steven Dennis, a retail consultant and former Neiman’s executive.

The timing of the merchandis­ing system blowup couldn’t be worse for Karen Katz, Neiman’s longtime chief executive, who was already wrestling with owners upset at the chain’s subpar performanc­e.

The owners, Ares Management and the Canada Pension Plan Investment Board, have retained an executive search firm to replace Neiman’s Csuite, including, possibly, Katz, sources said.

Ares and CPP declined to comment, but according to a source with knowledge of the situation, CPP has written down its $750 million investment in Neiman to zero and has a “team working on reorganizi­ng” Neiman’s $4.9 billion in debt.

CPP declined to comment on the writedown.

Ares and CPP bought Neiman in 2013 for $6 billion and split ownership equally.

Last week, Neiman withdrew its 15-month-old public offering.

A spokeswoma­n for Neiman declined to comment.

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