DISCUSSION
Neiman Marcus must survive both bankruptcy and COVID-19
Written by Tom Ryan
Neiman Marcus’ bankruptcy filing has been directly attributed to exorbitant debt levels. COVID-19 has dealt the famed luxury chain a major blow, but the company has been struggling with revenue challenges long before the onset of the pandemic.
Luxury chains like Neiman Marcus have been hurt by the shift to online selling and more consumer-direct brand purchasing by consumers. The vendors on Neiman Marcus’ unsecured creditors list, including Chanel, Gucci, Dolce & Gabbana and Theory, all have retail footholds in major cities. Luxury department stores also face new online rivals like Net-a-Porter and Moda Operandi as well as more pressure from Amazon.com, fast-fashion chains and off-pricers.
Consumers are also shifting their browsing and status purchases in favor of experiences, especially Millennials.
“The question always was: How can we appeal to a bigger audience?,” Steve Dennis, president, Sageberry Consulting and former Neiman executive, told The Washington Post. “Neiman Marcus has not been able to attract young customers to replace older customers who are literally dying or are aging out of their peak spending years.”
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Photo: Neiman Marcus[/caption]
With stores closed since mid-March due to COVID-19, an expected promotional climate in the coming months will constrain full-price selling and an economic downturn would derail discretionary purchases. Any ongoing restrictions or hesitancy to travel would significantly curtail tourism sales. Runway shows, fashion weeks and trade shows that drive buzz and trends are on hiatus.
Geoffroy van Raemdonck, who joined Neiman Marcus as CEO a year ago, said the retailer’s four-year “transformation” plan was gaining traction. The plan in large part centers on expanding its digital business that already accounts for a third of sales. The chain is working to enhance personalization by providing associates with digital clienteling tools.
Neiman also planned to focus on full-price sales with the downsizing of its Last Call format.
An in-store priority includes adding “retail theater” with a beauty salon and spa, a kitchen that offers cooking demonstrations, tastings and mixology classes, and fitting rooms complete with interactive touch screens on display at its first Manhattan store at Hudson Yards.
Saks is being mentioned as a potential suitor, but Neiman Marcus is planning to exchange debt for equity in a standalone emergence this fall. Mr. van Raemdonck said in a statement. “We will emerge a far stronger company.”
Photo: Neiman Marcus[/caption]
With stores closed since mid-March due to COVID-19, an expected promotional climate in the coming months will constrain full-price selling and an economic downturn would derail discretionary purchases. Any ongoing restrictions or hesitancy to travel would significantly curtail tourism sales. Runway shows, fashion weeks and trade shows that drive buzz and trends are on hiatus.
Geoffroy van Raemdonck, who joined Neiman Marcus as CEO a year ago, said the retailer’s four-year “transformation” plan was gaining traction. The plan in large part centers on expanding its digital business that already accounts for a third of sales. The chain is working to enhance personalization by providing associates with digital clienteling tools.
Neiman also planned to focus on full-price sales with the downsizing of its Last Call format.
An in-store priority includes adding “retail theater” with a beauty salon and spa, a kitchen that offers cooking demonstrations, tastings and mixology classes, and fitting rooms complete with interactive touch screens on display at its first Manhattan store at Hudson Yards.
Saks is being mentioned as a potential suitor, but Neiman Marcus is planning to exchange debt for equity in a standalone emergence this fall. Mr. van Raemdonck said in a statement. “We will emerge a far stronger company.”
- Neiman Marcus Group Enters into a Restructuring Support Agreement with a Significant Majority of its Creditors to Substantially Reduce Debt and Position the Company for Long-Term Growth – Neiman Marcus Group/PRNewswire
- Neiman Marcus Group Enters into a Restructuring Support Agreement with a Significant Majority of its Creditors to Substantially Reduce Debt and Position the Company for Long-Term Growth – Neiman Marcus Group
- Neiman Marcus, the Retailer to the Rich, Files for Bankruptcy – The Wall Street Journal
- Neiman Marcus, a Symbol of Luxury, Files for Bankruptcy – The New York Times
- A perspective for the luxury-goods industry during—and after—coronavirus – McKinsey & Co.
- Neiman Marcus files for Chapter 11 bankruptcy – The Washington Post
- Neiman Marcus Files for Bankruptcy – WWD
- Neiman Marcus Group Unveils Next Phase Of Strategic Transformation – Neiman Marcus Group/PRNewswire
- Should Neiman Marcus Exist? – Texas Monthly
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