Retailer Neiman Marcus files for bankruptcy
Luxury retail chain was bought by consortium that includes Canada Pension Plan Investment Board in 2013
Neiman Marcus, the 112-year-old storied luxury department store chain, has filed for Chapter 11 bankruptcy protection, the first department store chain to be toppled by the coronavirus pandemic.
The move, announced Thursday, follows the bankruptcy filing by J.Crew, which became the first major retailer to reorganize during the pandemic. Experts believe there will be more to come even as there are moves to reopen businesses in parts of the U.S., such as Texas and Florida.
"Prior to COVID-19, Neiman Marcus Group was making solid progress on our journey to long-term profitable and sustainable growth," said CEO Geoffroy van Raemdonck in a statement.
"However, like most businesses today, we are facing unprecedented disruption caused by the COVID-19 pandemic, which has placed inexorable pressure on our business."
The company said it expects to emerge from bankruptcy by this coming fall.
Like other non-essential stores, Neiman Marcus temporarily closed its stores, which number 43 across the U.S., in mid-March. About 10 stores have been reopened for curbside pickup as some states have relaxed lockdown orders.
As part of the bankruptcy filing, the Dallas-based Neiman Marcus says it has secured $675 million US in financing from creditors to keep operating during the restructuring, holding over two-thirds of the company's debt.
The bankruptcy filing is a big blow to Ares Management and the Canada Pension Plan Investment Board, which bought Neiman Marcus in 2013 for $6 billion.
The filing arrived after the department store, burdened with debt, had failed to make a payment to a key bondholder as its stores went dark to help contain the spread of the virus.
More than 60 per cent of U.S. retailers have likewise temporarily shuttered since March, but department stores were already in a weakened state long before then. Americans are no longer interested in doing all their shopping under one roof, instead picking and choosing items such as shoes or tops. When they do buy clothes, they head to T.J. Maxx and online retailers.
"Department stores have been struggling for a long time," said Craig Johnson, president of Customer Growth Partners, a retail consultancy. "Now, it's a blood bath. How many will survive is unclear."