Neiman Marcus, a Symbol of Luxury, Files for Bankruptcy
Source: New York Times
The high-end retailer is the first department store to file for bankruptcy during the coronavirus pandemic.
Neiman Marcus on Thursday became the first major department store group to file for bankruptcy protection during the coronavirus pandemic. Its a stunning fall that follows the collapse of Barneys New York late last year and comes as shadows gather over chains like Lord & Taylor and J.C. Penney.
At the end of March the coronavirus pandemic temporarily forced the closure of all 43 Neiman Marcus stores, as well as its two Bergdorf Goodman stores and Last Call outlets, all but stopping sales and crushing revenue. But while that may have been the immediate cause of Neimans filing, its problems had been building for years. The company took on an untenable amount of debt as part of two leveraged buyouts by private-equity firms, and Neimans did not respond quickly enough to changes in shopping habits. Together, those developments left the group in a precarious position even before the virus hit.
The pandemic has been disastrous for the already weakened retail industry. Last month, sales of clothing and accessories fell by more than half. Those numbers are only expected to get worse in April, because many stores were open for at least some of March (e-commerce, a relatively small contributor to total sales for most store chains, is not enough to save them). Earlier this week, J. Crew filed for bankruptcy. Retailers have furloughed employees, slashed corporate salaries and hoarded cash in a desperate attempt to make it to the end of the shutdown. But there is widespread acknowledgment that Neiman Marcus is not likely to be the last retailer to face the brink.
Still, neither Neiman Marcus nor Bergdorf Goodman is likely to disappear completely.
Read more: https://www.nytimes.com/2020/05/07/business/neiman-marcus-bankruptcy.html
2naSalit
(86,048 posts)Happyhippychick
(8,379 posts)The hits just keep coming
NYFlip
(323 posts)I feel bad for the employees and they can loose their jobs. Its not just about fashion
Ford_Prefect
(7,817 posts)gay texan
(2,403 posts)Do these companies not believe in a rainy day type of fund?
Politicub
(12,163 posts)Private equity companies leverage their holdings with as much debt as possible. It always seems that where private equity lurks, bankruptcy will follow. Private equity companies will create real estate trusts where they lease buildings back from themselves. They are like vampires that suck the blood out of companies and leave them to rot. The investors will make out like bandits, though, whether a company goes bankrupt or not.
Private equity is an insidious part of late-stage capitalism that needs to be regulated out of existence.
robbedvoter
(28,290 posts)Progressive Jones
(6,011 posts)IronLionZion
(45,256 posts)(he's not)
A lot of business heartache is from having to pay rent or mortgage payments on storefronts while closed for lockdown. You would think our government would have put in place some solution for this nation-wide problem...until you remember our country is run by malicious villains.
The real estate payment issue is closing lots of small businesses like restaurants permanently. Department stores have other longer term issues that have only been exacerbated by lockdown.