Did Neiman Marcus Make a Mistake Laying Off Its Service Ambassadors?

Leticia Miranda, a Bloomberg Opinion columnist, doesn’t think Neiman Marcus Group (NMG) is being entirely forthcoming about why sales fell nine percent in the most recent quarter and earnings before interest, taxes, depreciation and amortization plummeted 25 percent.

The retailer, which operates luxury department stores under its namesake and Bergdorf Goodman banners, said the results went against a very strong quarter a year ago and reflected higher promotional activity driven by excess inventory levels.

Ms. Miranda said that NMG failed to include its decision to reduce its workforce, including service ambassadors, by five percent as a factor in its down quarter.

“These were staff who greeted customers at store entrances and helped process returned merchandise, handled customer issues and recommended services to clients like alterations, jewelry cleaning, or spa treatments. That left the commission-based sales team responsible for facilitating returns while also attending to shoppers browsing the store’s luxury goods,” wrote Ms. Miranda.

In response to a query from Bloomberg, Neiman Marcus said the “changes better enable our store associates to deepen their relationships with our luxury customers.”

Mr. van Raemdonck earlier this year said that NMG was focusing its energy on the top two percent of its customers, who represent 40 percent of its business. This cohort spends an average of $27,000 a year with the retailer.

“We are no longer about selling everywhere on the price spectrum, from clearance to high-end jewelry,” Mr. van Raemdonck said at the time.

Unnamed sales reps were reported to be “horrified” at NMG’s approach. One told the New York Post that a customer who spends about $5,000 a year was “personally offended” at Mr. van Raemdonck’s remarks. The sales rep also said the strategy could turn off shoppers entering the luxury goods segment for the first time.

NMG continues to stand behind its top two percent strategy.

“We continue to see real strength with our most valuable customers,” Mr. van Raemdonck told WWD.

“We are very surgical in our actions and are distorting our efforts and spend toward customers that are already engaged in us. We are surgically looking at expenses. We remain really agile. We have lived in this uncertain environment for quite awhile and every month we double down on what’s really working,” he said.