Industry speculation was confirmed today as Neiman Marcus Group filed for bankruptcy as the coronavirus pandemic continues to impact retailers including recently filed J. Crew.
The Dallas-based luxury department store chain had nearly $5 billion in annual sales, according to its most recent public financial statement.
We are facing unprecedented disruption caused by the COVID-19 pandemic, which has placed inexorable pressure on our business.
– Geoffroy Van Raemdonck, Chairman and Chief Executive Officer of Neiman Marcus Group
“Prior to COVID-19, Neiman Marcus Group was making solid progress on our journey to long-term profitable and sustainable growth,” explained Van Raemdonck.
Neiman Marcus said it expects to emerge from bankruptcy by early fall. “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,” the CEO added. “We will emerge a far stronger company.
The bankruptcy filing is a blow to the Canada Pension Plan Investment Board and private equity firm Ares Management which bought Neiman Marcus in 2013 for $6 billion.
Due to the virus, Neiman Marcus temporarily closed its 43 stores in mid-March, recently opening about 10 of their locations for curbside pickup. Mytheresa is not a part of the Chapter 11 proceedings and will continue to operate independently.
As part of the bankruptcy filing, Neiman Marcus said it has secured $675 million in financing from a majority of creditors to keep operating during the restructuring as well as a $750 million exit financing package that would fully refinance the DIP financing and provide additional liquidity for the business. Those creditors now hold over two-thirds of the company’s debt.
In a letter to customers, Van Raemdonck stressed that Neiman Marcus had no plans to liquidate nor would services on the firm’s websites be interrupted. The company went on to explain they are evaluating locations but did not specify if it would close any stores.
Over 60% of U.S. retailers have temporarily closed since March, but department stores including JCPenney and Sears were operating with sales declines prior to the virus impact. National specialty chain J. Crew, saddled with a debt stemming from its $3 billion leveraged buyout in 2011 by private equity firms TPG Capital and Leonard Green & Partners, also filed for bankruptcy recently.