Neiman Marcus has officially filed for chapter 11 bankruptcy protection. The filing will see the luxury retailer eliminate $4 billion of roughly $5.1 billion in debt, allowing the creditors to become majority owners. Neiman isn’t planning mass store closings or asset sales as part of the restructuring. The company had over $4 billion in revenue in its most recent fiscal year, but was projected to lose a whopping $3 billion in sales in April.
- Interesting possibility: Hudson’s Bay Company, the owner of Saks Fifth Avenue, could be interested. Saks has tried unsuccessfully to merge with its rival several times during the past decade. Luxury behemoth LVMH Moët Hennessy Louis Vuitton has been mentioned as a possible buyer of Neiman’s subsidiary Bergdorf Goodman.
- Macro-level: Bain & Company released a report saying that the economic reality is “particularly bad for luxury.” The consultant expects the personal luxury goods market to contract 20% to 35% worldwide this year on weaker demand for pricey handbags and high heels, Bloomberg noted.
- Ramifications for Hudson Yards Mall: In March 2019, Neiman Marcus opened an 188,000-square-foot store spread across three floors anchoring the development. The company bet on ‘modern experiential retail’ with in-house aestheticians, live cooking and mixology demonstrations, and fitting rooms complete with interactive touch screens, according to the NYTimes.
- Why it matters: Related and Oxford Properties provided extremely favorable lease terms to the retailer and paid for the majority of the interior buildout costs. The developers receive five percent of sales in lieu of rent for the initial three years, and eight percent in the following two years. The brand was considered such a significant selling point that several other stores in the mall reached agreements in their leases that allow for rent discounts or exits if Neiman vacates and no equal replacement is found, TRD reported.