Neiman Marcus Files for Bankruptcy

In March 2019, the luxury retailer Neiman Marcus opened its first outpost in Manhattan. Spread over three floors and 188,000 square feet, the store was an anchor tenant of the gleaming Hudson Yards development and, the company’s chief executive said, a new kind of “retail theater.” It boasted in-house aestheticians, live cooking and mixology demonstrations, and fitting rooms complete with interactive touch screens.

The executive, Geoffroy van Raemdonck, was about a year into the job and had already hired a slew of new executives, including a chief for the company’s other jewel in New York, Bergdorf Goodman. Each of the hires, he said in a late November interview with The New York Times, “have a passion for transforming our business.”

“They all believe that not only are we going to delight our customers by bringing to them unique and curated experiences, but they really believe that we are traveling a new course for how the retail industry and department store are transforming themselves,” Mr. van Raemdonck said.

The company entered Chapter 11 restructuring proceedings in the U.S. Bankruptcy Court for the Southern District of Texas.

“This is simply a process that allows our company to alleviate debt, access additional capital to run the business during these challenging times, and emerge a stronger company with the ability to better serve you and continue our transformation over the long term,” he said.

Neiman Marcus said it would “continue to assess store closure decisions” for Neiman Marcus, Bergdorf Goodman and Last Call and reopen once it is safe to do so. Ten Neiman Marcus stores are now offering curbside pickup, and some temporary store closings will continue through May 31.

“It is a change of ownership by which our debt holders are forfeiting $4 billion in debt in exchange for owning the N.M.G. business operations,” Mr. van Raemdonck said in an internal video sent to employees on Thursday.

William Susman, managing director at Threadstone Advisors, said he expected the retailer to use bankruptcy to shed some of its leases and reduce its physical footprint, a situation that could make it more attractive to a potential buyer.

“Neiman Marcus has a bad balance sheet, but it’s still a luxury brand,” Mr. Susman said. “They still have a reason to exist.”

Moody’s said last May that Neiman Marcus’s debt levels had reached “unsustainable levels.”

Like most department stores, part of Neiman Marcus’s challenge has been transforming itself for customers who increasingly do their shopping online. Luxury brands like Neiman’s were slow to accept the idea of e-commerce, believing that the in-person experience was crucial to high-ticket sales. In 2014, in a shortcut to digital prowess, it acquired the successful German-based website, which had made a name for itself as an early competitor to Net-a-Porter.

But MyTheresa has become a major point of contention for a group of bondholders, who have been arguing since 2018 that Neiman Marcus improperly transferred MyTheresa’s valuable assets to the company’s owners, leaving little to protect holders of the company’s unsecured debt. is not included in the bankruptcy filing.

Though Mr. van Raemdonck said in the video to employees that the bankruptcy did not mean the company would be sold, speculation has begun about a potential acquisition.

Another name that has been mentioned as a possible buyer of Bergdorf Goodman (though not Neiman Marcus) is the luxury behemoth LVMH Moët Hennessy Louis Vuitton.

Until very recently, Neiman’s felt it was in a good position. When asked about Barneys in November, Mr. van Raemdonck expressed his dismay that the storied brand had fallen, but he emphasized that its challenges stood apart from Neiman’s properties.

“Every single store we have at Neiman Marcus Group, the brand or Bergdorf, they’re all profitable,” he said.

Michael J. de la Merced contributed reporting.

Contact Vanessa Friedman at [email protected] or Sapna Maheshwari at [email protected]

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