Neiman Marcus has received approval from bankruptcy court to access the next phase of financing as it reorganizes its business and continues reopening stores.
On Tuesday, the Dallas-based retailer announced that the United States Bankruptcy Court for the Southern District of Texas in Houston had granted it permission to immediately access $250 million and collect an additional $150 million in early September.
The company originally got the green light for $275 million when it filed for Chapter 11 protection early this month. In total, it has access to $675 million in debtor-in-possession financing.
“This financing provides us with ample liquidity to ensure business continuity as we gradually reopen our stores, invest in fall inventory and fund the expansion of our digital offerings as we continue our journey to become the preeminent luxury customer platform,” chairman and CEO Geoffroy van Raemdonck said in a statement. “Importantly, we remain on track to emerge from this process in fall 2020.”
Neiman Marcus, whose pressures have been years in the making, filed for bankruptcy on May 7 amid weeks of speculation as the coronavirus pandemic forced the temporary closures of all of its stores across the country. It listed its estimated assets in the range of $1 billion and $10 billion, which is roughly on par with its estimated liabilities.
As it continues operations with new financing, the department store chain has begun reopening outposts under its flagship banner, as well as Last Call and Bergdorf Goodman stores, in accordance with state and local guidelines. According to von Raemdonck, roughly 90% of its 43-unit brick-and-mortar fleet is “open to some degree,” whether for full service, curbside pickup, private appointment or a combination of those.
“Our business performance in recent weeks has been strong thanks to the success of our omnichannel experience,” he added. “With our digital stylists and remote selling capabilities, our associates have continued to engage with and support customers anytime, anywhere, driving significant sales even while remote.”
Post-bankruptcy, Neiman Marcus expects to eliminate $4 billion of debt, with no near-term maturities. For years, its balance sheet had been saddled with billions in debt — much of which stemmed from leveraged buyouts by private equity firms — it struggled amid digital disruption and reduced foot traffic. In August 2018, the company announced a four-year transformation plan centered on omnichannel and supply chain technology investments. It could end up trimming its portfolio of stores as part of its reorganization plan.