US luxury department store chain Neiman Marcus files for bankruptcy
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A Neiman Marcus store in Hudson Yards in New York. The Covid-19 crisis forced the company to furlough most of its 14,000 workers and close all its 43 Neiman stores, two Bergdorf Goodman locations in New York and roughly two dozen Last Call stores.
PHOTO: BLOOMBERG
NEW YORK • Neiman Marcus Group filed for bankruptcy protection yesterday after efforts to manage its crushing debt load unravelled, marking one of the highest-profile collapses amid the coronavirus pandemic.
It is now the second major US retailer to file for bankruptcy during the pandemic, following J. Crew's filing earlier on Monday, and will likely not be the last. J. C. Penney has also been exploring filing for bankruptcy while others like Sears were already distressed prior to the outbreak and must now cope with sales that have been cut off and uncertainty over how people will shop in the future.
The nearly 113-year-old luxury department company had been struggling with US$5 billion (S$7 billion) of debt, dwindling cash and competition from online rivals before the outbreak. The Covid-19 crisis exacerbated its problems, forcing it to furlough most of its 14,000 workers and close all its 43 Neiman stores, two Bergdorf Goodman locations in New York and roughly two dozen Last Call stores.
"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 chief executive Geoffroy van Raemdonck.
Most of the company's department store rivals also suspended operations because of the virus, at a time when the whole industry was already ground down by years of shopper defections to online merchants.
Neiman Marcus had been trying to simultaneously spend more on drawing customers while taming its debt load, with mixed success. Borrowings ballooned after its 2013 leveraged buyout to Ares Management Corp and the Canada Pension Plan Investment Board.
The company reached a deal with creditors last year that put off the due dates on some of its debt to buy time for a turnaround.
Neiman Marcus will now cede control to creditors under an agreement that will eliminate US$4 billion of debt while it attempts to reorganise. It has secured US$675 million in financing from its creditors to fund operations through bankruptcy.
BLOOMBERG, REUTERS
