Following weeks of speculation, Neiman Marcus Group filed for Chapter 11 protection today in Texas bankruptcy court.
The Dallas-based luxury retailer listed estimated assets in the range of $1 billion to $10 billion, versus estimated liabilities in the same range. The company said it has secured $675 million in financing from creditors to continue operations during the bankruptcy process. Mytheresa, the luxury e-commerce platform owned by NMG, is not included in the Chapter 11 restructuring.
According to court documents obtained by FN, Neiman Marcus’ largest debts are in the form of senior notes, with two claims worth nearly $80.7 million and about $56.6 million (UMB Bank serves as trustee). Major luxury brands are also among Neiman Marcus’ creditors with the largest unsecured claims. It owes more than $6 million to Chanel, $4.35 million to Veronica Beard, $3.16 million to Dolce & Gabbana and $2.71 million to Gucci. Falling shortly behind that, Tapestry Inc.-owned Stuart Weitzman has an unsecured claim of nearly $2.58 million, while Christian Louboutin has an owed balance totaling roughly $2.27 million.
Theory and Yves Saint Laurent also are owed more than $2 million, while Burberry has an unsecured claim just shy of the $2 million mark. Rag & Bone and Versace each have unsecured claims worth over $1.5 million, while Prada and Giorgio Armani are major creditors with more than $1.4 million in owed payments apiece. Both Jimmy Choo and Ferragamo have unsecured claims of about $1.16 million apiece, and Manolo Blahnik has an unsecured claim of over $1.04 million. Other fashion labels on the lengthy list of creditors include Bottega Veneta, Balenciaga, Alexander McQueen and Balmain.
In recent years, Neiman Marcus has faced numerous challenges in its quest for profitability, including digital disruption and reduced foot traffic. In August 2018, the retailer announced a four-year transformation plan that has entailed investing in omnichannel and supply chain technology, as well as embracing the growing resale trend through a minority stake in consignment company Fashionphile. Last year, the chain was able to rework some of its debt and avoid filing for bankruptcy. It has also looked into strategies for raising capital, including the potential sale or IPO of MyTheresa site.
Since mid-March, the coronavirus pandemic has forced the department store chain to close all doors across its Neiman Marcus, Last Call and Bergdorf Goodman banners, putting a dent in sales. What’s more, a “large portion” of the retailer’s workforce of roughly 14,000 persons has either been furloughed or received a pay cut. CEO Geoffroy van Raemdonck has forfeited his salary, while executives reporting directly to him waived a “significant amount” of their base pay.
While NMG had its challenges prior to the pandemic, van Raemdonck said in a statement today that the company had been “making solid progress on our journey to long-term profitable and sustainable growth” prior to COVID-19.
“We have grown our unrivaled luxury customer base, expanded our industry-leading customer relationships, achieved higher omnichannel penetration, and made meaningful strides in our transformation to become the preeminent luxury customer platform,” he said in a release. “However, like most businesses today, we are facing unprecedented disruption caused by the COVID-19 pandemic, which has placed inexorable pressure on our business.”