Neiman Marcus Profit Drops 7% in 3Q

Dallas Neiman Marcus Group Inc. said its third-quarter profit dropped 7% after it marked down merchandise as sales declined.

Net income fell to $55.4 million in the three months through April 26, the company said in a regulatory filing. A year earlier, it had profit of $59.5 million.

Sales slowed at Neiman Marcus's 39 namesake stores as customers clamped down on luxury purchases amid volatile stock markets and dropping home values, according to a Bloomberg report. Neiman Marcus said it expected “current economic conditions'' to continue. Markdowns in its current quarter would be higher than in 2007, it said.

Gross margin narrowed to 40% of sales from 41.5% a year earlier. Earnings before interest, taxes, depreciation and amortization dropped to $202 million.

Meanwhile, revenue fell 1% to $1.06 billion, the company said. Sales at stores open at least a year dropped 2.5%, pulled down by a 4.4% decline at the Neiman Marcus stores. Revenue gained 3.4% at Neiman Marcus's two Bergdorf Goodman stores, which are located in New York. Online and catalog sales rose 2%.