Neiman Marcus is the latest victim of the Covid-19 crisis, filing for bankruptcy on Wednesday.
Lauren Hirsch and Lauren Thomas reported the news for CNBC:
Neiman Marcus, saddled with debt and hit by the coronavirus pandemic, filed for bankruptcy on Thursday with a deal to hand its business over to its creditors.
The luxury department store chain had been struggling with competition from online rivals and dwindling cash before the outbreak. The health crisis exacerbated its problems, forcing it to furlough most of its 14,000 workers and close its 43 Neiman Marcus stores.
It is now the second major retailer to declare bankruptcy during the pandemic, following J. Crew’s filing earlier this week. It is likely not the last. J.C. Penney has also been exploring filing for bankruptcy. Many others are likewise forced to cope with sales that have been cut off and uncertainty over how people will shop in the future.
CNN’s Nathaniel Meyersohn and Chris Isidore wrote:
The company’s history goes back 113 years to its first store in Dallas, which is still its home base. The company also operates the Bergdorf Goodman and Last Call chains, as well as a separate online outlet mytheresa.com, which is not included in the bankruptcy case, according to the company.
The company had 69 stores among the three brands as of last year, including a massive new store in New York City’s new upscale Hudson Yards development. But in March, Neiman announced plans to permanently close a “majority” of its 22 Last Call stores.
A bankruptcy filing doesn’t necessarily mean a company will go out of business. Many companies use bankruptcy to shed debt and other liabilities they can’t afford while closing unprofitable operations and locations.
Pamela N. Danziger from Forbes noted:
Under the new agreement, the Neiman Marcus Group has secured debtor-in-possession of $675 million financing to continue operating through the proceedings, and an additional $750 million exit financing to “fully refinance the DIP financing and provide additional liquidity,” a company statement reported.
With plans to emerge from bankruptcy in the fall, the company said temporary closures of its 43 namesake department stores, two Bergdorf Goodman, and 22 Last Call discount outlets have been extended until May 31, with selective reopenings planned as local conditions allow.
Currently, it is offering curbside pickup at ten stores, and two stores in Atlanta and NorthPark, Dallas are open by private appointment.