Neiman Marcus was once famed for the fantasy gifts in its Christmas Book catalog — a $100,000 chicken coop inspired by Versailles, custom guitars designed by Texas music legends and his and hers Rolls-Royces.
But its luxurious selections and attentive customer service weren’t able to overcome its massive debt and the coronavirus shutdowns.
After more than a century in business, Neiman Marcus Group Inc. filed for bankruptcy Thursday. Creditors will take control of the department store chain, putting up $675 million to get through the court process and $750 million in exit financing, the company said. It expects to emerge later this year with about $4 billion cut from the $5.5 billion in debt it listed in its filing.
Chief Executive Officer Geoffroy van Raemdonck said that, before the health crisis, the ritzy retailer was “making solid progress on our journey to long-term profitable and sustainable growth.” It had grown its customer base and improved its online operation. “However, like most businesses today, we are facing unprecedented disruption caused by the Covid-19 pandemic, which has placed inexorable pressures on our business.”
The chain closed all 43 of its stores and furloughed most of its 14,000 employees in March. Neiman Marcus, with its hefty rent payments, appeared to be suffering more than most U.S. retailers that have been closed during the quarantine period. The company was projected to lose $3 billion in sales in April.
Neiman Marcus faced its share of problems even before the pandemic. Department stores have suffered from falling foot traffic as consumers flock to online stores.
As it starts to reopen stores, Neiman Marcus’ high-end focus may be an extra burden. The shutdowns are “particularly bad for luxury,” according to a report from Bain & Co, which expects the personal luxury goods market to contract 20% to 35% worldwide this year on weaker demand for pricey handbags and high heels.
Born in Texas
Neiman Marcus was founded amidst a financial crisis. Siblings Herbert Marcus and Carrie M. Neiman, along with Carrie’s husband Abraham L. Neiman, opened its doors in Dallas in 1907, a month before a bank run and subsequent panic throughout the U.S. caused so much financial turmoil that it spurred the government to create the Federal Reserve.
The store focused on women’s fashion, especially outerwear and millinery, and its pricey and high-quality items helped it stand out from the city’s two large department stores, Sanger and Harris. The retailer gained a following from the elite who benefited from the oil boom in Texas. In the following decades, it remained a regional player, opening stores in Houston and Fort Worth.
In the late 1960s, the company was bought by retailer Carter Hawley Hale. Under the leadership of Herbert's eldest son, Stanley Marcus, it merged with a California-based retailer Broadway-Hale Stores and the outlet was then able to expand nationally. Stores popped up in Atlanta, St. Louis and Bal Harbour, Florida, which is now one of the nation’s best performing malls. It added Bergdorf Goodman to its portfolio in 1972.