Retailer Neiman Marcus files for bankruptcy

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Neiman Marcus, the 112-year-old luxury department store chain, has filed for Chapter 11 bankruptcy, the first department store chain to be hit by the coronavirus pandemic.

The decision, announced Thursday, follows the bankruptcy of J.Crew, who became the first major retailer to reorganize during the pandemic. Experts believe there will be more to come, although steps are being taken to reopen businesses in parts of the United States, such as Texas and Florida.

“Prior to COVID-19, the Neiman Marcus group was making solid progress on our path to profitable and sustainable growth over the long term,” said CEO Geoffroy van Raemdonck in a statement.

“However, like most businesses today, we are facing an unprecedented disruption caused by the COVID-19 pandemic, which has put inexorable pressure on our business. “

The company has said it plans to exit bankruptcy by next fall.

Like other non-essential stores, Neiman Marcus temporarily closed its 43 stores in the United States in mid-March. A dozen stores have been reopened for curbside pickup, with some states having relaxed the lock controls.

As part of the bankruptcy filing, Dallas-based Neiman Marcus said it had obtained US $ 675 million in financing from creditors to continue operating during the restructuring, holding more than two-thirds of the company’s debt.

Filing for bankruptcy is a blow to Ares Management and the Canada Pension Plan Investment Board, which bought Neiman Marcus in 2013 for $ 6 billion.

The case came after the debt-laden department store failed to make payments to a key bond holder because its stores were shut down to help contain the spread of the virus.

Over 60% of American retailers have also temporarily closed since March, but department stores were already weakened long before. Americans are no longer interested in doing all their shopping under one roof, instead of choosing and choosing items such as shoes or tops. When they buy clothes, they 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 consulting firm. “Now it’s a bloodbath. The number of those who will survive is unclear. “

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