Neiman Marcus Exits Bankruptcy, Looks to Reimagine Business

Serving as an unexpected light in the retail crisis brought on by the Covid-19 virus pandemic, Neiman Marcus has officially come out of Chapter 11 bankruptcy. According to reports, the luxury department store has cleared a sizeable amount of debts and has brought on new owners to reimagine its business.

Neiman Marcus has officially come out of bankruptcy, a process that left the upscale department store with a lighter debt load and new owners to confront the same industry trends that led to its financial woes.

The Ares Management Corp. and Canadian Pension Plan Investment Board have now sold their stakes in Neiman Marcus Holding Company Inc. to Pacific Investment Management Co., Davidson Kempner Capital Management and Sixth Street Partners. Accompanying the change of owners is new board comprised of six members including, Pauline Brown, the former chairman of North America for LVMH Moët Hennessy Louis Vuitton SE, and Kris Miller, the former chief strategy officer at eBay.

Under new management and board, the retailer eliminated more than $4 billion USD of existing debt and now looks to combat the continuing challenges that put it into bankruptcy. The new owners have also prepared a $750 million USD exit package that will go towards refinancing a loan and bring much needed liquidity to the business.

With the financial cleanup completed, Neiman Marcus and its Bergdorf Goodman store still must deal with the pandemic’s fallout, shopper defections to online merchants and a preference among younger customers for experiences instead of objects.

The current environment for a fashion luxury retailer isn’t ideal. The company was hit particularly hard by the pandemic. The Neiman Marcus Group temporarily closed its 43 Neiman Marcus and two Bergdorf Goodman stores nationwide in compliance with guidelines set by the Centers for Disease Control and Prevention in response to the Covid-19 pandemic, although 31 locations have gradually started to reopen. The company filed for court protection in May.

The new owners “understand the value of our brands and the opportunity for growth”, said a Geoffroy van Raemdonck, the chief executive officer who kept his position during the bankruptcy process and will now lead the turnaround effort.

Some of Neiman’s creditors and retail peers couldn’t say the same. Lord & Taylor has been running going-out-of-business sales, and Stein Mart Inc. is being dismantled. Marble Ridge Capital, a creditor that peppered Neiman Marcus with objections to its debt maneuvers before and after the bankruptcy filing, is being wound down after co-founder Dan Kamensky’s tactics drew criminal charges.

“While the unprecedented business disruption caused by Covid-19 has presented many challenges, it has also given us the opportunity to reimagine our platform and improve our business”, said van Raemdonck. “We emerge from Chapter 11 as a stronger, more innovative retailer, brand partner, and employer”.

The Neiman Marcus Group runs 43 Neiman’s stores and two Bergdorf Goodman stores, as well as an online business that includes neimanmarcus.com, bergdorfgoodman.com, and the Mytheresa luxury web site.

BANKRUPT NEIMAN MARCUS OFFICIALLY SHUTS DOWN

When Neiman Marcus opened a store in Bellevue in 2009, many locals were skeptical that a shop specializing in four-figure cocktail dresses and handbags could survive the Great Recession. But while the upscale scale retailer proved its skeptics wrong in that recession, it isn’t so lucky this time.

Neiman Marcus (Neiman Marcus Group) is the premier destination for luxury fashion and unparalleled service. For more than a century Neiman Marcus has transformed and elevated the shopping experience, becoming a leading purveyor of the world’s most unique luxury goods.

Just 16 months ago, Neiman Marcus rolled out the red carpet to debut its 188,000 sq.-ft. store at Hudson Yards mall, the ambitious retail project on the West Side of Manhattan. Now after much speculation, the bankrupt retailer has confirmed it will exit the location as part of its Chapter 11 bankruptcy restructuring.

The Neiman Marcus Group is just one of many major retailers being severely impacted by the Covid-19 virus pandamic, joining the growing list of brands filing for bankruptcy. Prior to the outbreak, there was speculation that the company, which is behind Neiman Marcus, Bergdorf Goodman, Mytheresa, Last Call, and Horchow, was the next retailer to file for bankruptcy because of its $4 billion in long-term debt. The COVID-19 pandemic has created an additional struggle for the retailer, as its stores have been closed since March.

The 113-year-old retailer follows several other fashion brands that have succumbed to the pressures of the pandemic and filed for bankruptcy over the last few months, including J. Crew, J.C. Penny, Centric Brands and True Religion, among others.

The Neiman Marcus Group temporarily closed its 43 Neiman Marcus and two Bergdorf Goodman stores nationwide in compliance with guidelines set by the Centers for Disease Control and Prevention in response to the COVID-19 pandemic. It has since reopened 31 stores for customer traffic.

Court documents indicate the retailer is closing four Neiman Marcus locations, including its recently opened 188,000 square-foot location at Hudson Yards, as well as its Bellevue, Wash., Palm Beach, Fla. And Fort Lauderdale, Fla. locations. It has also closed 17 out of 22 Last Call outlets. Sources indicate that Neiman Marcus may also close its doors in Dallas, St. Louis, Natick, Mass. and Westchester, N.Y. The company is also closing two of its distribution centers in Longview and Las Colinas, Tex.

Several factors contributed to Neiman Marcus’ bankruptcy. The COVID-19 pandemic has strained the company’s operations because of its temporary store closures nationwide. The company also furloughed roughly one-third of its 13.700 employees as a result of those closures. Neiman Marcus plans on having a reorganization plan confirmed by early September.

The Corona virus pandemic has also a big inpact on the bankruptcy proceedings. One impact of the COVID-19 pandemic on the bankruptcy proceedings is that the Neiman Marcus Group cannot liquidate the business while stores remain temporarily closed. It also may be more difficult to negotiate debtor-in-possession financing to keep the business running during the pandemic.

Partly for political reasons, and the decisions that have been made, the Covid 19 pandamic is not over yet. Its far from over, especially in some of Neiman Marcus’ ‘cities’. So lets think about the loyal 13.700+ employees in this véry difficult times.