Neiman Marcus has filed for bankruptcy as the “great resettling” continues for retail. The company announced Thursday morning (May 7) that it has entered into a binding agreement “with a significant majority of our creditors to undergo a financial restructuring that will substantially reduce the Company’s debt load, and provide access to considerable financing to ensure business continuity. To implement this agreement, we commenced voluntary Chapter 11 proceedings in the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division.”
A statement from CEO Geoffroy van Raemdonck said that the filing will not affect store reopening plans, and that the company expects to be in a stronger position when it does.
“We have been on a journey to carry on the love and magic that makes Neiman Marcus, Neiman Marcus Last Call, and Bergdorf Goodman such a unique place and bring you the most exceptional and personal luxury experience,” said van Raemdonck. “However, like most businesses today, we are facing unprecedented disruption caused by the COVID-19 pandemic, which has placed inexorable pressure on our business. This is simply a process that allows our Company to alleviate debt, access additional capital to run the business during these challenging times, and emerge a stronger company with the ability to better serve you and continue our transformation over the long term.”
The move is not a surprise, and actually could have a positive outcome for the 113-year old luxury retail chain.
“Many believe the best outcome for Neiman Marcus would be to reorganize and emerge as a standalone company,” said The Dallas Morning News. “While many of the luxury brands it sells have built their own stores and direct-to-consumer businesses, Neiman Marcus is still an important link to luxury consumers for major luxury brands. And a newly restructured Neiman Marcus would be the best outcome for Dallas, where the company is a major employer. The company is also embedded in the social fabric and has long been at the center of major fundraising efforts as a host and sponsor.”
Brick-and-mortar retailers' problems hardly seem surprising in a world where COVID-19 is shutting everything down. PYMNTS.com's latest poll of U.S. consumers found that 39.2 percent of Americans are buying retail goods online these days, up from just 12.3 percent who reported doing so as of March 6 as the pandemic was just reaching U.S. public attention. To read the full report, click here.