The company started to struggle in the early 2000s. It had about three dozen stores with a handful more planned. It purchased majority stakes in luxury brands like cosmetics business Laura Mercier and handbag seller Kate Spade. In 2005, private equity firms Warburg Pincus and TPG Capital, formerly Texas Pacific Group, bought Neiman Marcus for $5.1 billion.

Eight years later, Neiman Marcus was sold again for $6 billion to Ares Management and the Canada Pension Plan Investment Board in a leveraged buyout that left the business laden with billions in debt.

‘Project Rolex’
To battle back against the lure of online shopping e-commerce cutting the store’s foot traffic, Neiman Marcus’s management devised a refinancing and recovery plan in 2018 referred to internally as “Project Rolex.” The goal was to reach more than $5 billion in total sales, with $700 million in adjusted earnings, by 2024. Sales in 2018 were $4.9 billion, with a $251 million profit.

The strategy involved first stabilizing the company, then improving operations by boosting customer loyalty and revamping the in-store experience. E-commerce would become more prominent as Neiman Marcus doubled its investment in digital operations. The network of department stores would get new services like coffee shops, bars, beauty salons and florists in order to get shoppers through their doors.

The biggest bet came in the form of a large new flagship in New York, its first in the city, which opened in March of last year. The Neiman Marcus at the shopping mall within Hudson Yards, a major new real estate development on Manhattan’s West Side, would plant the brand’s flag in America’s department store capital. It was a three-floor, 188,000-square-foot answer to rivals like Saks Fifth Avenue and Bloomingdale’s. Neiman had long been restricted from opening a store in Manhattan due to a lease agreement involving Bergdorf Goodman.

As the Hudson Yards location was opening, the company struck a deal with creditors that put off the due dates on some of its debt to buy time for a turnaround. This year, right before the coronavirus shutdown, van Raemdonck said in an interview that he would inject more money into his Neiman Marcus and Bergdorf Goodman stores by closing the company’s Last Call discount chain that was no longer “core to our business today.”

Still, “the debt burden ultimately proved insurmountable, particularly given near term operating challenges related to the coronavirus pandemic,” said David Silverman, Fitch retail analyst, in an emailed statement.

Other apparel retailers have filed for bankruptcy since the outbreak in the U.S., including preppy apparel retailer J. Crew and high-end jeanmaker True Religion. One of Neiman’s closest peers — luxury department store Barneys — filed for bankruptcy last year and eventually closed stores. A disproportionate number of retail bankruptcies result in liquidation, Silverman noted.

But Neiman Marcus bets that it will still have a place in the post-coronavirus retail landscape.

“In moments of adversity like Covid-19, you realize where you are strongest,” van Raemdonck said in an interview. “We have very few stores, but we are going to be the place where luxury customers go to access luxury products and experiences.”