Upscale Retailer Neiman Marcus Exits eBay

| About: eBay Inc. (EBAY)

Upscale retailer Neiman Marcus has permanently exited eBay (NASDAQ:EBAY) after it failed to meet the retailer's expectations. Neiman Marcus was among the first "Fashion Outlets" eBay launched in the U.S. in 2011, selling clothing shoes and accessories under its off-price brand, Last Call By Neiman Marcus.

Ginger Reeder, Vice President of Corporate Communications for Neiman Marcus Group Services, said the closure of the Last Call By Neiman Marcus eBay store was permanent. The last orders were taken from customers on January 7, 2013.

"We are always trying new partnerships and this is one where we felt we learned a great deal, but it did not meet all our expectations," Reeder told me. "We parted on good terms with eBay, but we will not be reopening in the future."

In addition to its flagship stores, the retailer operates 33 Neiman Marcus Last Call stores that average approximately 28,000 square feet each in size, according to its annual shareholder report. The Last Call brick-and-mortar stores offer off-price goods purchased directly for resale as well as end-of-season clearance goods from the Neiman Marcus stores, Bergdorf Goodman stores and online operations. The Last Call stores, along with six stores operated under the CUSP name that targets younger customers, generate less than 10% of the retailer's total revenues.

The retailer's online sales made up 20.2% of Neiman Marcus' total revenues in fiscal year 2012, 18.9% in fiscal year 2011 and 18.5% in fiscal year 2010. It launched a website under the Neiman Marcus Last Call brand in 2011.

Wes Shepherd, CEO of Channel IQ, told me he couldn't speak specifically to the departure of Neiman Marcus from eBay but said a lot more brands are accepting of eBay and the idea of their authorized dealers selling there. Sheperd's company works with manufacturers and retailers and helps manufacturers monitor channels for pricing, policy and trademark infringements on channels, including eBay.

eBay launched 20 fashion outlet stores in 2011 as part of its focus on creating tailored vertical shopping experiences in key categories. What did brands want when they came to the eBay channel? eBay CEO John Donahoe promised incremental sales - access to its millions of shoppers.

At the time, Donahoe said eBay was working with brands on special promotions, flash sales and "some other things" to drive incremental volume for the brands, specifically mentioning Coach (NYSE:COH) and telling analysts that eBay was working with the Neiman team. "I feel good about our ability to sign additional merchants," he said, and was making "good steady progress." There are currently 25 fashion outlets listed in the eBay directory today.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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