Neiman Marcus files for bankruptcy

It became such an institution that in 1983 Frederick Wiseman made a documentary about it titled, simply, “The shop. At that point, it was in the midst of a nationwide expansion that culminated in a public offering in 1999 by Harcourt General, the book publisher and then store owner.

Six years later, in private equity’s first somewhat ill-advised flirtation with luxury, a leveraged buyout by TPG and Warburg Pincus pulled it off the market for around $ 5.1 billion – and its debt problems continued. start. The company weathered the financial crisis and changed hands in 2013, when it was sold to a group led by Ares Management, another private equity firm, and the Pension Plan Investment Board of Canada. Canada in a $ 6 billion agreement. Since then, the company has grown in spurts.

Neiman Marcus filed to be made public in 2015, which would have made it possible to repay its debt, but an initial public offering never materialized. Its most recent public annual report was for the year ended July 2018, when its revenue was $ 4.9 billion and its net interest expense of $ 307 million exceeded its net income by $ 251. millions of dollars. The company has spent much of the past two years restructuring a crushing long-term debt burden that was reported to be close to $ 5 billion a year ago. Last year, it managed to push back most of its deadlines to the end of 2023.

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

As is the case with most department stores, part of Neiman Marcus’ challenge has been transforming for customers who increasingly shop online. Luxury brands like Neiman were slow to embrace the idea of ​​e-commerce, believing the in-person experience to be crucial for high-priced sales. In 2014, in a shortcut to digital prowess, he acquired the successful Germany-based website, which had made a name for itself as Net-a-Porter’s first competitor.

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

Although Mr van Raemdonck told employees in the video that bankruptcy did not mean the company would be sold, speculation has started about a potential acquisition.

Richard Baker, the CEO of Hudson’s Bay, which owns Saks Fifth Avenue, explored buying Neiman Marcus in 2017. A Saks and Neiman Marcus-Bergdorf Goodman combination would consolidate the few high-end department stores that remain. Saks also has licensed use from the Barneys New York label.

About Marc Womack

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