Bank of America Merrill Lynch Leveraged Finance Conference December 1, 2011

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1 Bank of America Merrill Lynch Leveraged Finance Conference December 1, 2011

2 Forward Looking Statements Disclaimer The following information contains, or may be deemed to contain, forward-looking statements (as defined in the U.S. Private Securities Litigation Reform Act of 1995). By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. The future results of the company may vary from the results expressed in, or implied by, the following forward-looking statements, possibly to a material degree. For a discussion of some of the important factors that could cause the company s results to differ from those expressed in, or implied by, the following forward-looking statements, please refer to the company s Offering Circular. The company undertakes no obligation to update or revise any forwardlooking statements. 1

3 THE NEIMAN MARCUS GROUP REVENUE - $4.1 BILLION* SPECIALTY RETAIL - $3.3 BILLION 41 Neiman Marcus Stores 2 Bergdorf Goodman Stores 6 CUSP Stores 30 Last Call Stores NEIMAN MARCUS DIRECT - $782 MILLION *12 MONTH ROLLING REVENUE FIGURES AS OF Q1 FY2012 Neimanmarcus.com Bergdorfgoodman.com Horchow.com CUSP.com Lastcall.com 2

4 BUSINESS FOUNDATION TO BE BEST-IN-CLASS IN EACH OF THE PILLARS OF OUR BUSINESS Merchandise Marketing Customer Service Neiman Marcus Group will provide an exceptional and seamless omni-channel shopping experience for the affluent customer 3

5 Specialty Retail

6 1 Full Line Store Locations Bellevue 1 Minneapolis Chicago Northbrook, Oakbrook Troy Westchester, NYC - BG (2) LA, SF, Palo Alto, San Diego, Newport Beach, Topanga, Walnut Creek (1) King of Prussia Short Hills, Paramus Tyson s Corner Boston, Natick Washington D.C. 1 Charlotte 1 Honolulu Las Vegas Scottsdale Denver Northpark, Houston, Dallas, Plano, Ft. Worth, San Antonio, Austin 7 St. Louis 1 7 Atlanta Bal Harbour, Coral Gables, Ft. Lauderdale, Tampa Bay, Orlando, Palm Beach, Boca Raton Geographically diverse store base in premier locations in the nation's most affluent markets (1) Expected to open in March

7 Neiman Marcus Direct 6

8 Consumer Trends Luxury Stock market volatility impacts spending behavior Willingness to spend is very deliberate Strong interest in fashion trends and luxury products Price-value relationship has increased in importance Aspirational Disposable income, diminished but stabilized Increased focus on value, but has returned to shopping Strong interest in fashion trends Luxury brands remain important 10

9 FY12 Focus Omni-channel Technology Customer Service

10 Omni-Channel Customer Experience Creating a total shopping experience regardless of channel Access to affluent customers beyond store trading areas Consistent policies and procedures Coordinated promotional activities to ensure a consistent message Anywhere Any time Any place 9

11 STORES Omni-Channel Retailing ONLINE World-class in-store customer service Research before buying Touch and feel product Shopping outside of trade areas Personal shoppers able to sell across channels Editorial authority on fashion and trends Accept on-line returns in stores MOBILE Providing sales associates with better technology to serve their customers Launched mobile shopping apps Shop anytime, anywhere on any device 10

12 Technology In Store: Improved technology tools for sales associates Upgraded WIFI capabilities Online: Improved website functionality and personalization Integrated editorial content in the shopping path Expanded targeted marketing Social Networking 11

13 Social Networking NMdaily Twitter 82,000 BG followers 47,000 NM followers Facebook 5th/58th 485,000 NM Facebook fans 135,000 BG Facebook fans Distinct Voice and Point of View 12

14 Customer Service Uniformity of customer experience Increased use of Mystery Shoppers Improved customer survey process More stringent customer satisfaction measurement standards Enhanced hiring tools Evolving sales associate/customer communication tools 13

15 THE NEIMAN MARCUS GROUP the customer is in control at the mall... anything good at the trunk show? YES! Pulled you two sweaters and a dress that I think you ll love. stop by! I ll be there in 5 min. can you pull some shoes to try as well? Pulled several pairs and two handbags. See you in a few! immediate interaction and service: texts s pictures accessibility responsive and personalized selling 14

16 The Transformation of the Shopping Experience InCircle The 1st and oldest retail customer loyalty program s 4.6M addresses 34M s sent per week Events/Promotions Direct Mail # of unique NM catalog and book titles: 53 (8 books and 45 catalogs) # of NM customer mailings (catalogs and books only): 45M Apps 288,000 total downloads 15

17 THE NEIMAN MARCUS GROUP ANYTIME ANYWHERE ANY PLACE 16

18 Financial Overview

19 Historical Financial Snapshot Revenue $5,500 $4,500 $4,030 $3,695 $4,601 $4,390 $3,643 $3,693 $4,002 $3,500 8% 9% 9% 5% 1% $2,500 8% $1,500 (21%) FY05 FY06 FY07 FY08 FY09 FY10 FY11 Revenue % Growth SSS: 9.8% 7.3% 6.7% 1.7% (21.4)% (0.1)% 8.1% $2,000 $1,500 $1,000 $500 $0 Gross Profit $1,636 $1,666 $1,346 $1,439 $1,413 $1,273 $1,107 36% 36% 37% 36% 34% 35% 30% FY05 FY06 FY07 FY08 FY09 FY10 FY11 Gross Profit % Margin SG&A Adjusted EBITDA (1) $1,100 $1,000 $900 $800 $700 $907 25% $958 24% $1,015 $1,045 $883 $885 $934 23% 23% 24% 24% 23% FY05 FY06 FY07 FY08 FY09 FY10 FY11 SG&A % Sales $800 $600 $400 $200 $687 $686 $510 $538 $525 $447 14% 13% 16% 15% $274 8% 12% 13% FY05 FY06 FY07 FY08 FY09 FY10 FY11 Adjusted EBITDA % Margin 18 (1) EBITDA adjusted to exclude non-recurring charges.

20 Specialty Retail Historical Revenue $4,000 $3,000 $3,103 $3,375 $3,675 $3,853 $2,991 $3,011 $3,245 $2,000 $1,000 9% 9% 9% 5% 1% 8% $0 (22%) FY05 FY06 FY07 FY08 FY09 FY10 FY11 Specialty Retail Revenue % Growth Historical EBIT $500 $250 $378 $404 12% 12% $491 $477 13% 12% $124 $273 9% $342 11% $0 4% FY05 FY06 FY07 FY08 FY09 FY10 FY11 EBIT % Margin 19

21 Neiman Marcus Direct Historical Revenue $800 $700 $600 $592 $655 $715 $747 $652 $682 $757 $500 $400 4% 11% 9% 4% 5% 11% $300 $200 (13%) FY05 FY06 FY07 FY08 FY09 FY10 FY11 Direct Revenue % Growth Historical EBIT $150 $100 $75 $98 $116 $118 $73 $113 $113 $50 $0 16% 16% 17% 15% 15% 13% 11% FY05 FY06 FY07 FY08 FY09 FY10 FY11 EBIT % Margin 20

22 NMG Financial Summary First Quarter ($ in millions) FY11 FY12 Total Sales $927 $1,003 Total % change 6.7% 8.2% Comparable stores % 6.4% 8.0% Gross Profit $365 $395 % margin 39.3% 39.4% SG&A Expense $223 $240 % sales 24.0% 23.9% EBITDA $151 $168 % margin 16.3% 16.8% 21

23 Liquidity Management LIQUIDITY ($ Millions) Cash Revolver $930 $938 $916 $815 $792 $576 $509 $616 $626 $469 $98 $421 ($99) $84 $323 $322 $239 $290 7/31/ Free Cash Flow Generation 7/31/ Free Cash Flow Generation 7/31/ Free Cash Flow Use 7/30/ /29/

24 Liquidity Management INVENTORY MANAGEMENT (% Change) GROSS CAPITAL EXPENDITURES ($ Millions) Q1 FY11 Q1 FY12 $183 $175 $164 $148 7% 8% 8% 8% $102 $94 Sales Inventory Sales Inventory $59 Maintained tight control of inventory E 23

25 Debt Maturities ($ in millions) $2,500 $2,000 $2,060 $1,500 Term Loan $1,000 $500 $500 $125 Sr. Sub Notes 2028 Debentures $0 '12 '13 '14 '15 '16 '17 '18 '28 Company also has a $700M credit facility maturing in 2016 which is currently undrawn. Q1 FY06 FY06 FY07 FY08 FY09 FY10 FY11 Q1 FY12 Leverage Ratio 6.5x 5.6x 4.3x 4.3x 10.9x 6.5x 5.1x 4.9x Net Leverage Ratio (1) 5.8x 5.3x 4.2x 4.0x 9.9x 5.7x 4.6x 4.5x (1) Assumes all available cash (less $50M) is used to pay down debt. 24

26 Reconciliation of Adjusted EBITDA ($ in millions) FY05 FY06 FY07 FY08 FY09 FY10 Q1 FY11 FY11 Q1 FY12 EBITDA (Reported) (429) Adjustments: Pension curtailment gain (33) Impairment of Horchow tradename Proceeds from investment in an Internet retailer (4) Other income related to aged, non-escheatable gift cards (6) Transaction and other costs 24 Loss on disposition of Chef's Catalog 15 Gain on sale of private label credit card portfolio (6) Impairment charges 703 EBITDA (Adjusted)

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