The department store chain it has entered into an agreement with a significant majority of its creditors to undergo a financial restructuring, substantially reducing its debt load and interest payments and supporting continued operations during the COVID-19 pandemic and beyond.
“Prior to COVID-19, Neiman Marcus Group was making solid progress on our journey to long-term profitable and sustainable growth,” Geoffroy van Raemdonck, Chairman and Chief Executive Officer of Neiman Marcus Group said. “However, like most businesses today, we are facing unprecedented disruption caused by the COVID-19 pandemic, which has placed inexorable pressure on our business.”
As part of the bankruptcy filing, the company secured $675 million 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.
Temporary closures of some Neiman Marcus, Bergdorf Goodman, and Last Call stores have been extended through May 31. The Dallas-based retailer continues to operate online.
Furloughs or temporary salary reductions have been put into effect through at least May 31 with the potential to either extend or shorten based on COVID-19 developments.
A total of 10 stores nationwide are now open for curbside pickup – all Texas Neiman Marcus stores, as well as Tampa, Las Vegas and Tysons Corner stores.
On May 4, the Atlanta and NorthPark Neiman Marcus stores became available to customers by private appointment.
Neiman Marcus says the Chapter 11 process will not impact the timing of store re-openings.
The company hopes to emerge from bankruptcy protection in the fall.
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% 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 like 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.”
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