As I do my rounds of financial news this morning, one story in particular struck a chord somewhere deep within me. Especially in sharp contrast to reporting the articles on “revenge buying” in China earlier this week (read: Will “Revenge Buying” Save the Luxury Industry?)
Having spent most of my adult life in the United States — I have been a loyal patron to Neiman Marcus. Reports of serious financial straits left me shaken.
With online shopping becoming the norm for most Americans, for years the giant retailers brick and mortar have been treading dangerous waters. They’ve enhanced their digital platforms and pivoted to experiential retailing, but still struggled.
And now this Coronavirus pandemic will put the proverbial cherry on top.
The Neiman Marcus Group, parent of Neiman Marcus and Bergdorf Goodman, defaulted on its $5.6 million debt payment that was due earlier this week. This leads to suspicion that there will be a bankruptcy filing possibly within days. To be fair, any bankruptcy filing is likely to be a Chapter 11 reorganization not a liquidation. In other words, NM doesn’t go out of business. Rather, it operates with the significant protections of US bankruptcy laws, presumably obtains financing and negotiates new terms with its creditors. Indeed, skipping a payment could be a way to bring lenders to the table. The company has a 30 day grace period but creditors report that the company has been silent thus far.
Having all Neiman Marcus stores temporarily closed due to coronavirus has brought in minimal revenue quite possibly tipping my favorite retailer over the edge.
Earlier this month the company furloughed one third of its workforce. The rest are working part time with all stores currently closed.
In other retail news, Nordstrom has canceled merchandise orders and delayed it’s anniversary sale to August and has downsized that event by 50%.
Nordstroms previously canceled all orders for April and May deliveries and has decided to even suspend many orders for June and July.
Reading this news really drives home the impact that coronavirus will have on stores we consider often nearly family.
Will keep you updated on the details in the days to come.
Photo courtesy WWD