Neiman Marcus Has Filed for Bankruptcy
Mere days after preppy fashion brand J.Crew announced its bankruptcy filing, famed luxury department store Neiman Marcus has also sought chapter 11 protection. The move comes after weeks of temporary closures to the retailer's 43 Neiman Marcus locations as well as both of their Bergdorf Goodman stores and their 22 Last Call outlets due to the outbreak of the novel coronavirus.
“Like most businesses today, we are facing unprecedented disruption caused by the COVID-19 pandemic, which has placed inexorable pressure on our business,” said Neiman Marcus Group chairman and CEO Geoffroy van Raemdonck in a statement. At the end of March, the company furloughed the majority of its 14,000 employees, and has struggled under the weight of declining apparel sales, which are down more than 50% across the category since shutdowns started in mid-March, according to Census Bureau data.
However, the coronavirus and general market downturn are not the only contributing factors to Neiman Marcus's filing. Founded in Dallas, Texas in 1907 by Herbert Marcus, his sister Carrie Marcus Neiman, and her husband A. L. Neiman, the company (which also owns the brands Horchow and Mytheresa) grew into a retail giant with offerings aimed at luxury shoppers. But in recent years, increased competition and a shift toward online shopping have seen them lose traction in their sales base, with the company reporting a $31.2 million loss last summer. The downturn has also come at a time when the brand is burdened with billions of dollars of debt, due in part to two leveraged buyouts they've undergone since 2005.
The company has reportedly secured $675 million in financing to see them through the chapter 11 restructuring. Their brick-and-mortar stores are expected to remain closed through May 31, though they continue to take online orders.
The harbinger of what is beginning to appear to be a trend, fellow high-end department store Barneys closed down completely following a bankruptcy filing in late 2019, which ultimately led to a sale to Authentic Brands. Now experts are speculating that this latest news from Neiman Marcus could be a sign of more to come within the industry, with rumors abounding over the fate of similarly indebted retailers like JC Penney and Lord & Taylor.
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