Neiman Marcus finally declares bankruptcy following weeks of rumors
After weeks in the works, Dallas-based Neiman Marcus has filed for Chapter 11 bankruptcy. In a statement issued on May 7, chairman and CEO Geoffroy van Raemdonck said that the driving force was the coronavirus pandemic.
"Like most businesses today, we are facing unprecedented disruption caused by the COVID-19 pandemic, which has placed inexorable pressure on our business," van Raemdonck said.
The luxury department store chain closed all 43 of its stores on March 18; most will remain closed through the end of May. Sorry, no bankruptcy sales.
The company entered a restructuring agreement with its creditors that will reduce its debt load and interest payments, and support continued operations during the pandemic and beyond.
Van Raemdonck said that, prior to COVID-19, Neiman Marcus Group was making "solid progress on our journey to long-term profitable and sustainable growth."
"We have grown our unrivaled luxury customer base, expanded our industry-leading customer relationships, achieved higher omni-channel penetration, and made meaningful strides in our transformation to become the preeminent luxury customer platform," he said.
"My team and I appreciate the partnership and the steadfast support of all our stakeholders and Board of Directors through this process," he said. "The binding agreement from our creditors gives us additional liquidity to operate the business during the pandemic and the financial flexibility to accelerate our transformation. 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."
Prior to the commencement of the Chapter 11 proceedings, new boards of managers were established at two debtor entities - Mariposa Intermediate Holdings LLC and Neiman Marcus Group LTD LLC - to lead the debtors through the restructuring process. Each board of managers is chaired by van Raemdonck and includes at least one independent manager. The creditors will become the majority owners.
The company expects to emerge from the process in early fall 2020.
Neiman Marcus Group also provided an update on actions it's taking to manage its business through the COVID-19 pandemic:
- Temporary closures of some Neiman Marcus, Bergdorf Goodman, and Last Call stores, extended through May 31
- Continue to serve customers remotely and digitally through its associates and style advisors, as well as on the Neiman Marcus and Bergdorf Goodman websites and apps.
- Furloughs or temporary salary reductions for a large portion of associates 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, including the Domain, plus Tampa, Las Vegas, and Tysons Corner in Northern Virginia.
On May 4, the Atlanta and NorthPark Neiman Marcus stores became available to customers by private appointment.
The company will continue to assess store closure decisions and will reopen stores as it is safe to do so based on the status of the pandemic. The Chapter 11 process will not impact the timing of store re-openings.
Neiman Marcus is not the first: J Crew filed for bankruptcy on May 4.