Yet another luxury retailer is bankrupt. Neiman Marcus and Bergdorf Goodman (owned by Neiman’s) have filed for Chapter 11 bankruptcy.
The retailers have long been struggling financially, but the unprecedented impact of the Covid-19 pandemic expedited its decline. It is the largest American retailer to begin bankruptcy proceedings since the coronavirus turned the world economy upside down.
Social media posts for both Neiman’s and Bergdorf explained the filing, pointing out the the brands will not be shuttering:
“We have reached an agreement with lenders to undergo a financial restructuring that will substantially reduce our debt load and provide us access to a significant amount of financing to ensure business continuity via Chapter 11 proceedings. This is not a liquidation of our business.”
The department store (which is already $5 billion in debt) was prompted to begin filing when it was unable to make a payment.
According to The Robb Report,
Money owed to many of the brands it stocks also represents a considerable problem. Neiman Marcus owes $6 million to Chanel, $3.2 million to Gucci’s USA operation and $2.3 million to Christian Louboutin, as just three examples. Though it expects to begin reopening stores in select regions soon, the retail environment may not be very welcoming, with a looming recession and no true end date in sight for the coronavirus outbreak.
But Neiman is far from the only department story to struggle, as many of its competitors are confronting similar challenges. Nordstrom is expected to shutter 16 stores permanently, and Saks Fifth Avenue recently laid off 507 workers based in New York while also missing its April mortgage payment. And, of course, Barneys was already felled before coronavirus became a global threat.
In a letter to shareholders detailing the agreement, Neiman’s chairman and CEO Geoffroy van Raemdonck said,
“Prior to Covid-19, Neiman Marcus Group was making solid progress on our journey to long-term profitable and sustainable growth… We will emerge a far stronger company. In a world that is changing, we are uniquely positioned to give our brand partners access to our loyal luxury customers like no other company. We will deliver that through the strength of our associate relationships and digital solutions.”
Reuters reports that J.C. Penney Co. Inc. is also expected to file for bankruptcy as early as next week…
The times they are a changin’…
JC Penny: First Victim of Corona— NEERAJ BAJPAI (@NeerajCNBC) May 8, 2020
-118 years old retail chain J.C. Penney to file for bankruptcy next week
-Company will close 25% stores out of 850
-Company has $4 billion debt
-Total Employee 85000@CNBC_Awaaz
(Photo, Trey Speegle; via Robb Report)