Retailers report a 50% revenue impact amid coronavirus.
Luxury department store chain Neiman Marcus Group said Thursday it is filing for Chapter 11 bankruptcy protection as the coronavirus tips struggling retailers into existential crises.
It was not immediately clear whether the retailer plans any permanent store closings during its bankruptcy, which allows companies to shed unaffordable contracts such as store leases.
Neiman Marcus said it obtained support from “a significant majority of its creditors to undergo a financial restructuring, substantially reducing its debt load and interest payments and supporting continued operations during the COVID-19 pandemic and beyond.”
Neiman Marcus completed a debt restructuring plan in 2019 that was aimed at avoiding bankruptcy. But the coronavirus forced Neiman Marcus and other department stores to temporarily close their stores, exacerbating their woes. Department stores have struggled for years amid heightened competition from digital players such as Amazon, discount chains such as T.J. Maxx and specialty retailers.
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Neiman Marcus, whose stores include the Bergdorf Goodman luxury chain, announced in March that it would close the majority of its 22 Last Call stores.
The company hopes to avoid the fate of rival Barney’s, which liquidated in 2019.
Neiman Marcus CEO Geoffroy van Raemdonck said in a statement that the company had been “making solid progress on our journey to long-term profitable and sustainable growth” before COVID-19.
“We have grown our unrivaled luxury customer base, expanded our industry-leading customer relationships, achieved higher omni-channel penetration, and made meaningful strides in our transformation to become the preeminent luxury customer platform,” he said. “However, like most businesses today, we are facing unprecedented disruption caused by the COVID-19 pandemic, which has placed inexorable pressure on our business.”
The company proposes a plan to eliminate $4 billion in debt during its bankruptcy and hopes to emerge from the process in the early fall.
Neiman Marcus closed all of its stores through at least May 31, though 10 locations are open for curbside pickup services. Many workers are furloughed or face temporary pay cuts.
Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.
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