Bergdorf Goodman, the high-end U.S. department store, plans to expand its international presence next year, the latest example of how the industry is looking to capitalize on a strong global luxury market.
The expansion will be fueled in part by an investment of as much as $200 million in Bergdorf Goodman's parent company, Neiman Marcus Group, by Farfetch Ltd., an online luxury retailer that also sells its e-commerce services to other retailers.
Farfetch and Neiman Marcus executives said on Tuesday that they will work together to improve Bergdorf Goodman's U.S. website and launch its first international websites in 2023. In an interview, Neiman Marcus CEO Geoffroy van Raemdonck said he couldn't disclose which countries the company is targeting -- but China is a top "consideration." Providing websites in different countries will reduce shipping times and import expenses for shoppers to buy from Bergdorf Goodman.
"I think we will open in a lot of countries," Van Raemdonck said. "The question is really which countries do we double down on, from an investment point of view."
Bergdorf Goodman and Neiman Marcus products will also be available on Farfetch's website, which sells to customers in more than 190 countries. That's a potential source of additional revenue for Neiman Marcus, which is looking to bounce back after filing for bankruptcy during the pandemic.
Van Raemdonck said the company considered going international on its own, but ultimately decided to partner with Farfetch because it offered speed and efficiency.
"We are doing really well right now," Van Raemdonck said. "We're growing at an accelerated rate compared to pre-covid and at a higher profitability rate." The deal with Farfetch will further speed up growth, he added.
Van Raemdonck and Farfetch CEO Jose Neves didn't disclose how much Neiman Marcus Group is paying Farfetch for its e-commerce services or what kind of revenue they eventually expect to generate on the new Bergdorf Goodman websites or on Farfetch's own website.
Both executives said they are bullish on the U.S. luxury market, buoyed in part by strong economic growth. "It's also growing fundamentally because there are more consumers, younger consumers who are entering the luxury market during the pandemic," Van Raemdonck said.
The average age of customers who spend more than $10,000 each year with Neiman Marcus Group has fallen by seven years compared with before the pandemic, he said. The men's business is also robust.
"A partnership of this scale with one of the U.S.'s preeminent luxury retailers is a stamp of legitimacy on Farfetch's technology," Wells Fargo analyst Ike Boruchow wrote in a research note on Tuesday.