Neiman Marcus declared bankruptcy on Thursday, making it the largest U.S. retailer to collapse since the coronavirus outbreak devastated the U.S. economy. The high-end department store chain had nearly $5 billion in annual sales, according to its most recent public financial statement.
In a statement, CEO Geoffroy van Raemdonck said the company and other retailers are "facing unprecedented disruption caused by the COVID-19 pandemic, which has placed inexorable pressure on our business."
"The binding agreement from our creditors gives us additional liquidity to operate the business during the pandemic and the financial flexibility to accelerate our transformation," he added. "We will emerge a far stronger company.
Nieman Marcus said it expects to emerge from bankruptcy by the fall.
Like other non-essential retailers, Neiman Marcus temporarily closed its stores, which number 43, in mid-March. About 10 stores have since reopened for curbside pickup as some states have relaxed lockdown orders.
As part of the bankruptcy filing, Dallas-based Neiman Marcus says it has secured $675 million in financing from creditors to keep operating during the restructuring, holding over two-thirds of the company's debt. The bankruptcy filing is a big blow to Ares Management and the Canada Pension Plan Investment Board, which bought Neiman Marcus in 2013 for $6 billion.
The filing arrived after the department store, burdened with debt, had failed to make a payment to a key bondholder as its stores went dark to help contain the spread of the virus.
More than 60% of U.S. retailers have temporarily closed since March, but department stores were already in a weakened state long before then. Americans are no longer interested in doing all their shopping under one roof, instead picking and choosing items like shoes or tops. When they do buy clothes, they can head to T.J. Maxx and online retailers.
"Department stores have been struggling for a long time," said Craig Johnson, president of Customer Growth Partners, a retail consultancy. "Now, it's a bloodbath. How many will survive is unclear."
Preppy clothes maker J. Crew filed for bankruptcy protection last week.
The Associated Press contributed to this report.
First published on May 7, 2020 / 10:49 AM
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