Neiman Marcus Group is preparing to seek bankruptcy protection, becoming the first major U.S. department store operator to succumb to the economic fallout from the coronavirus outbreak, Reuters first reported. The debt-laden company has been left with few options after being forced to temporarily shut all 43 of its Neiman Marcus locations, 12 of its Last Call stores, and its two Bergdorf Goodman stores in New York.
- Not alone: Other department store operators that have also had to close their stores are battling to avoid Neiman Marcus’ fate. Macy’s and Nordstrom have been rushing to secure new financing, such as by borrowing against some of their real estate. J.C. Penney is contemplating a bankruptcy filing as a way to rework its unsustainable finances and save money on looming debt payments.
- Private equity gone bad: Neiman Marcus’ borrowings total about $4.8 billion. Some of this debt is the legacy of its $6 billion leveraged buyout in 2013 by its owners, private equity firm Ares Management and Canada Pension Plan Investment Board (CPPIB).