Why Mytheresa Is Not Part of Parent Neiman Marcus’ Bankruptcy Proceedings

Mytheresa is distancing itself from parent The Neiman Marcus Group Inc. as the latter’s namesake chain of department stores has gone bankrupt.

In a statement, the Germany-born luxury online retailer clarified that it was not part of Neiman Marcus’ Chapter 11 proceedings. It said that it continues to operate as an independent business and is unable to provide further comment.

“As in the past years, Mytheresa will continue to operate successfully as a standalone entity — legally, financially and operationally,” CEO Michael Kliger said. “Of course we are facing difficult times, but we can already see that being an online luxury retailer gives us resilience and the trend to e-commerce will be accelerated by this crisis.”

In 2014, Mytheresa — the digital arm of Munich fashion store Theresa, founded by Christoph and Susanne Botschen in 1987 — was acquired by Neiman Marcus Group Ltd. In September 2018, the luxury retailer transferred the subsidiary to parent holding company The Neiman Marcus Group Inc., which is owned by Ares Management LP and the Canada Pension Plan Investment Board.

Upon its transfer from Neiman Marcus Group Ltd. to The Neiman Marcus Group Inc., Mytheresa was not subject to the same rules under the credit agreement as the other units of the company. The move, which put Mytheresa further from the reach of creditors, led the trustees of some investors to sue The Neiman Marcus Group Inc. and its private equity owners over the corporate transfer of the e-commerce site.

These creditors had argued that the shuffling of Mytheresa cost Neiman Marcus Group Ltd. its “billion-dollar crown-jewel asset” — particularly as flagship department store chain Neiman Marcus was facing a high risk of default due to debt stemming from The Neiman Marcus Group Inc.’s private equity buyout. (Neiman Marcus was saddled with about $6 billion in debt after its 2013 purchase by Ares and the CPPIB.) The goal of the transfer, experts had speculated, was to cushion Mytheresa in the event of a bankruptcy.

In an effort to turn around its business, whose pressures have been years in the making, The Neiman Marcus Group Inc. announced last April that it was exploring strategic alternatives for Mytheresa to raise capital, including the site’s potential sale or IPO.

However, the coronavirus pandemic — which forced the closures of Neiman, Last Call and Bergdorf Goodman banners over the past few weeks — has ultimately led to Neiman Marcus’ demise. After weeks of bankruptcy speculation, the debt-saddled company today filed for Chapter 11 protection. It has secured $675 million in financing from creditors to continue operations during the proceedings.

“Prior to COVID-19, Neiman Marcus Group was making solid progress on our journey to long-term profitable and sustainable growth,” Geoffroy van Raemdonck, chairman and CEO of The Neiman Marcus Group Inc., 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.”

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