The 113 year old chain best known for its high end merchandise has filed for bankruptcy on Thursday, making it the second major retailer to do so during the coronavirus pandemic. The Dallas based retailer has struggled to pay down $5 billion in debt, much of it from leveraged buyouts in 2005 and 2013. The pandemic has forced it to temporarily shut down all 43 of its stores and furlough the majority of its 14,000 workers.
“The writing has been on the wall for years: Neiman Marcus has an unsustainable amount of debt,” said Steve Dennis, a Dallas-based consultant and former Neiman Marcus executive. “The pandemic just accelerated the inevitable.”
Keep in mind, this news comes three days after mall-based apparel chain J. Crew filed for Chapter 11 bankruptcy protection. More than 263,000 stores across the country have temporarily closed in recent weeks, according to GlobalData Retail, and entire shopping malls now sit empty as social distancing keeps consumers at home. More bankruptcies are projected in the coming months, analysts and attorneys say, as retailers run out of ways to negotiate leases and other debts. “You’ve got a situation where companies that were already failing won’t be able to pay”, says bankruptcy attorney McKool Smith.
The company joins a long list of national retailers that have filed for bankruptcy in recent years. Similarly, the other retailers were purchased by private equity firs and hedge funds in the mid 2000’s when a booming economy and low interest rates made leveraged buyouts particularly attractive. The deals were financed using large swaths of debt, under the assumption that the good times would continue and companies would grow.
A year into the position, executive Geoffrey van Raemdonck hired a host of new executives, including a chief for the company’s other money maker in New York, Bergdorf Goodman and Last Call outlets. Each of the hires, he said in a late November interview with The New York Times, has “a passion for transforming our business”.
He said, “They all believe that not only are we going to delight our customers by bringing them unique and curated experiences, but they really believe that we are travelling a new course for how the retail industry and department store are transforming themselves” Mr. van Raemdonck falsely projected.
It crashed and burned, unfortunately and at the same time that other retail giants like Lord & Taylor and JC Penney are co-collapsing.
Mr. Raemdonck stated in a letter to customers, “This is simply a process that allows our company to alleviate debt, access additional capital to run the business during these challenging times, and emerge a stronger company with the ability to better serve you and continue our transformation over the long term”.
There are talks that LVHM (Louis Vuitton Hennesy Moet) may be a possible of Bergdorf Goodman, ( a subsidiary Neiman Marcus) which a luxury department store Bergdorf Goodman is where you find your Gucci grip strap sandals for $295 and your Balenciaga training sock sneakers, and those would run you about $350. Hopefully their merchandise will be on sale when and if they decide to open back up. Sending positive vibes their way. This coronavirus pandemic had been tough for some businesses around the globe.