The Neiman Marcus Group Reports Third Quarter Earnings <a name="MRR"></a>

May 23, 2001 at 8:29 AM EDT

CHESTNUT HILL, Mass.--(BUSINESS WIRE)--May 23, 2001--The Neiman Marcus Group, Inc. (NYSE:NMG.A, NMG.B) today reported diluted earnings per share of $0.80 on total revenues of $681.5 million in the third quarter of fiscal 2001.

For the 13 weeks ended April 28, 2001, total revenues declined 0.3 percent from $683.8 million in the year-ago period. Comparable revenues decreased by 1.4 percent. Operating earnings were $66.5 million compared to $79.8 million a year ago. Diluted net earnings per share were $0.80 on net earnings of $38.2 million with fewer shares outstanding compared to net earnings of $45.2 million, equal to $0.94 diluted earnings per share in the prior-year period.

For the 39 weeks ended April 28, 2001, total revenues rose 4.1 percent to $2,322.1 million from $2,230.3 million a year ago. Comparable revenues increased 3.4 percent. Operating earnings were $220.1 million compared with $223.9 million a year ago. Net earnings before cumulative effect of an accounting change were $126.2 million, equal to $2.65 per diluted share compared with net earnings of $123.9 million, or $2.53 per diluted share in the prior-year period.

"As expected, a challenging retail environment led to an essentially flat top line in the third quarter, while incentives and markdowns put pressure on margins," said Burton M. Tansky, chief executive officer.

Third quarter SG&A expense decreased in dollars and as a percentage of revenues compared to last year. This decrease reflects an ongoing cost reduction initiative to help offset lower sales growth and position the company for the future.

In the Specialty Retail Store segment, third quarter revenues of $572.6 million declined 1.4 percent from $581.0 million a year ago. Total revenues at Neiman Marcus Stores declined 1.6 percent in the quarter, with comparable revenues down 2.9 percent. Bergdorf Goodman posted a 0.4 percent decline in total and comparable revenues.

Specialty Retail Store segment operating earnings declined to $63.8 million from $80.6 million a year ago arising primarily from lower gross margins on higher markdowns taken at Neiman Marcus Stores and Bergdorf Goodman.

Third quarter revenues at Neiman Marcus Direct were $88.0 million, up 3.2 percent from $85.2 million in the year-ago period. Strong sales gains in the Chef's Catalog and Horchow businesses were partially offset by weaker sales in NM apparel.

Operating earnings in the direct marketing segment were $6.7 million compared with $7.1 million a year ago, reflecting lower gross margins and higher expenses primarily related to increased paper and circulation costs.

Revenues related to the company's brand development initiative rose slightly in the quarter, and NeimanMarcus.com revenues nearly quadrupled compared to a year ago.

"We are planning for a 3 to 4 percent comparable revenue growth in the fourth quarter, with higher markdowns necessary to clear inventory," said Mr. Tansky.

Inventories at the end of the quarter were $696 million compared to $623 million a year ago.

The Neiman Marcus Group includes the Specialty Retail Stores segment, which consists of Neiman Marcus Stores and Bergdorf Goodman, and the Direct Marketing segment.

The Company will host a conference call today at 9:00 am (EDT) to review these results. Interested parties may access www.neimanmarcusgroup.com to listen to a live broadcast.

The figures are as follows:

Statements in this release referring to the expected future plans and performance of the Company are forward-looking statements. Actual future results may differ materially from such statements. Factors that could affect future performance include, but are not limited to: changes in economic conditions or consumer confidence; integration of acquired businesses; changes in consumer preferences or fashion trends; delays in anticipated store openings; adverse weather conditions, particularly during peak selling seasons; changes in demographic or retail environments; competitive influences; significant increases in paper, printing and postage costs; and changes in the Company's relationships with designers and other resources. For more information, see the Company's filings with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances.

                     THE NEIMAN MARCUS GROUP, INC.
                  CONSOLIDATED STATEMENTS OF EARNINGS


(In thousands            For the Thirty-Nine      For the Thirteen
 except for per share       Weeks Ended              Weeks Ended
 amounts)               April 28,   April 29,   April 28,    April 29,
                          2001        2000        2001         2000
                                   (Restated)               (Restated)

Revenues              $ 2,322,102 $ 2,230,255 $   681,545 $   683,829

Cost of goods
 sold, including
 buying and
 occupancy costs        1,503,757   1,432,877     441,181     427,120

Selling, general
 and administrative
 expenses                 585,569     561,302     169,418     172,545

Corporate expenses         12,697      12,169       4,477       4,402

Operating earnings        220,079     223,907      66,469      79,762

Interest expense          (11,869)    (17,827)     (3,518)     (5,038)

Earnings before
 income taxes,
 minority interest
 and cumulative
 effect of
 accounting change        208,210     206,080      62,951      74,724

Income taxes              (79,120)    (78,310)    (23,922)    (28,395)

Earnings before
 minority interest
 and cumulative
 effect of
 accounting change        129,090     127,770      39,029      46,329

Minority interest
 in net earnings
 of subsidiaries           (2,845)     (3,891)       (847)     (1,149)

Earnings before
 cumulative effect
 of accounting change     126,245     123,879      38,182      45,180

Cumulative effect
 of accounting
 change, net                1,860        --          --          --

Net earnings          $   128,105 $   123,879 $    38,182 $    45,180

Weighted average number
 of common and common
 equivalent shares
 outstanding:

Basic                      47,077      48,695      47,251      47,908
Diluted                    47,574      48,907      47,708      48,130

Earnings per share:

Basic:
  Earnings before
   accounting change  $      2.68 $      2.54 $      0.81 $      0.94
  Accounting change          0.04        --          --          --
  Basic net earnings  $      2.72 $      2.54 $      0.81 $      0.94

Diluted:
  Earnings before
   accounting change  $      2.65 $      2.53 $      0.80 $      0.94
  Accounting change          0.04        --          --          --
  Diluted net
   earnings           $      2.69 $      2.53 $      0.80 $      0.94

--30--gk/bos*

CONTACT: The Neiman Marcus Group, Inc.
Jonna Manes, Director
Corporate Relations
(617) 232-0760