The coronavirus has pushed Neiman Marcus to the point of bankruptcy, the first major store in the U.S. to topple due to the pandemic, according to a Sunday (April 19) report by Reuters, citing sources.
Already saddled with debt, Neiman Marcus was forced to shutter all 43 of its locations, along with more than 20 of its Last Call stores and two of its Bergdorf Goodman shops. Bloomberg reported in March that the company was mulling bankruptcy as a way to ease its $4.3 billion in debt. Most of its 14,000 employees are currently furloughed.
The sources told Reuters that the timing of the bankruptcy filing is not defined but “could come within days.”
“In light of the significant headwinds stemming from the coronavirus pandemic and our expectation for a U.S. recession this year, we believe the company’s prospects for a turnaround are increasingly low,” Standard & Poor’s analysts wrote in a note last week, as reported by Reuters.
Analysts dropped the credit rating on Neiman Marcus as “junk” and said the move reflected the “elevated potential” of a debt restructuring.
Among other department stores, Macy’s and Nordstrom are looking for new financing. Already on the verge of bankruptcy, J.C. Penney is considering moving forward to “rework its unsustainable finances,” Reuters said in a report last week.
The first Neiman Marcus store was opened in Dallas, Texas, by the Marcus and Neiman families in 1907. The company acquired New York City’s Bergdorf Goodman in 1972.
The coronavirus outbreak has pushed the company to the brink. While it has asked some workers back to closed stores to fulfill online orders, these operations cannot make up for lost sales in physical stores.
“Retail has hung a closed sign on the door literally and metaphorically,” Neil Saunders, managing director of GlobalData Retail, told the Associated Press. “This is the most catastrophic crisis that retail has faced — worse than the financial crisis in 2008, worse than 9/11. Almost overnight, the retail economy shifted from being about things people want to things that they need.”
Earlier this month, Neiman Marcus started to prepare itself for possible bankruptcy. The luxury department store retailer reportedly started having private discussions with bondholders regarding potential financing that would assist it with ongoing operations during bankruptcy protection.