THE WALL STREET JOURNAL. ***** Thursday, March 12, 2020 |B3
BUSINESS NEWS
Neiman Marcus says its customers spend an average of $50,000 a year with the retailer. A Neiman Marcus in Paramus, N.J.GABBY JONES/BLOOMBERG NEWSgo. But because the company
plans to hire new employees,
the net reduction will be less
than half that amount.
Neiman Marcus started par-
ing back Last Call in 2017,when it announced the closure
of about one-quarter of the
fleet. It plans to close more
than half of its remaining loca-
tions over the next eight
months. About 500 jobs will beNeiman Marcus GroupLtd.
said it will close more than
half of its Last Call discount
locations to focus on its luxury
department stores, retreating
from an area that has been one
of the few bright spots in re-
tailing.
Other retailers including
Saks Fifth Avenue andNord-
stromInc. have been ramping
up their off-price stores that
sell name-brand goods at steep
discounts as a way to appeal
to younger and more price-
conscious shoppers. Both
chains now operate more off-
price stores than full-price
stores. Market leader T.J.
Maxx opened 21 stores last
BYSUZANNEKAPNER
year, bringing its total to 1,273.
Neiman Marcus currently
has 22 Last Call stores.
“We are different from our
competitors,” said Neiman
Marcus Chief Executive Geof-
froy van Raemdonck. “Our
strategy is to focus on the lux-
ury customer and full-priced
selling.”
He added that one-fifth of
Neiman Marcus’s customers
spend an average of $50,000 a
year with the retailer.
To better serve those
wealthy shoppers, Neiman
Marcus is combining its in-
store and online teams. It will
be training sales associates to
interact with shoppers before
and after purchases to help
them with services such as al-
terations, beauty treatments
and dining. It operates about
45 department stores, includ-
ing Bergdorf Goodman in Man-
hattan.
As a result, about 250 non-
selling associates will be letAt Neiman,
It’s Last Call
For Off-Price
Luxury retailer closing
all but a handful of its
22 clearance stores to
focus on full price
eliminated. The company is
also selling two distribution
centers in Texas.
“This is not a pullback,” Mr.
van Raemdonck said. “This is a
move forward. We’ve got astrategy that is working. We
want to put our effort behind
the full-priced, luxury cus-
tomer. This is what will differ-
entiate us from the competi-
tion.”Energy drinks are a weak
spot for both Coca-Cola and
PepsiCo, and neither owns a
major brand in the category.
Coke, which owns a stake in
Monster Beverage Corp. and
distributes its products, re-
cently launched an energy
drink in the U.S. over Monster
Beverage’s objections.
Rockstar, which PepsiCo al-
ready distributes, is one of a
handful of major energy-drink
brands. The entrepreneur Rus-
sell Weiner founded the com-
pany in 2001, when Rockstar
was the first energy drink to
come in now-ubiquitous 16-
ounce cans. The number of
energy-drink offerings has
since exploded and begunPepsiCoInc. agreed to buy
Rockstar Energy Beverages,
in a move to expand its pres-
ence in the fast-growing en-
ergy-drink category.
The beverage and snack gi-
ant will pay $3.85 billion for
closely held Rockstar, the
companies said Wednesday,
confirming an earlier Wall
Street Journal report.
PepsiCo and rivals includ-
ing Coca-Cola Co. have been
working for years to shift
their beverage sales away
from sugary sodas and toward
lower-calorie offerings includ-
ing water and tea as well as
coffee drinks.
BYCARALOMBARDO edging out sodas for space in
store coolers. Austria-based
Red Bull GmbH and Monster
Beverage dominate the mar-
ket, which in addition to
Rockstar counts another
brand, Bang, as a significant
player.
In addition to traditional
energy drinks with loud labelsand flavors including Killer
Black Cherry, Rockstar makes
several sugar-free and low-
calorie energy drinks as well
as an organic version and oth-
ers made with fruit juice.
The deal marks the first big
move since Ramon Laguarta
took over as PepsiCo’s chief
executive from Indra Nooyi in- The Purchase, N.Y., com-
pany’s last multibillion-dollar
deal was the acquisition of
SodaStream, the seltzer-ma-
chine maker. Mr. Laguarta was
deeply involved in that deal,
which came in the final
months of Ms. Nooyi’s tenure.
While PepsiCo has distrib-
uted Rockstar drinks in North
America since 2009, the exist-
ing agreement limits what it
can do with other external
brands and with those it sells
under its own Mountain Dew
label.
Once the deal closes, Pep-
siCo could do more with its
Mountain Dew brands, includ-
ing Kickstart and Game Fuel,
and potentially distribute
other energy-drink brands. It
would be able to expand dis-
tribution and product offer-
ings under the Rockstar
brand.
Buying Rockstar “gives us
the ability to play in energy
from soup to nuts,” PepsiCo
Chief Financial Officer Hugh
Johnston said in an interview.
It should also enable thecompany to sidestep any legal
tussle like the one that en-
snared Coca-Cola. PepsiCo’s
rival has for years held a sig-
nificant stake in Monster Bev-
erage. Coca-Cola last year won
an arbitration claim that al-
lows it to expand sales of its
own Coke-branded energy
drinks after Monster Beverage
tried to stop the rollout.
When Mr. Laguarta was
asked about PepsiCo’s energy-
drink strategy on its earnings
call last month, he pointed to
success in a partnership with
Starbucks Corp. that allows
PepsiCo to sell ready-to-drink
coffee beverages and said it
plans to do “a better job with
Rockstar.”PepsiCo to Acquire Rockstar in a Grab for Energy Drinks
PepsiCo and rivals
have tried to shift
sales away from
sugary sodas.180
110
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