According to the media outlet, an investor group consisting of hedge fund Third Point LLC and investment firm Mudrick Capital Management LP wants Neiman Marcus to sell itself, rather than to move forward with the $600 million financing package it has lined up in order to file for Chapter 11 protection. (Neiman Marcus has declined to comment for this story.)
Multiple reports have said that Neiman Marcus — which operates its namesake banner, as well as Last Call, MyTheresa and Bergdorf Goodman — plans to file for Chapter 11 protection within the coming days. Amid digital disruption and reduced foot traffic, the company has faced numerous struggles in recent years in its quest for profitability. Further, the luxury retailer has a hefty debt load of about $4 billion, much of which stems from its 2013 private equity buyout. In August 2018, it announced a four-year transformation plan that has entailed investing in omnichannel and supply chain technology, as well as embracing the growing resale trend through a minority stake in consignment company Fashionphile.
Neiman Marcus has looked into various strategies for raising capital, including the potential sale or IPO of its MyTheresa e-commerce site. But the coronavirus pandemic has forced the company to temporarily shutter stores across its banners since mid-March. With doors shut, a “large portion” of the retailer’s workforce has either been furloughed or received a pay cut. CEO Geoffroy van Raemdonck has forfeited his salary, while executives reporting directly to him have waived a “significant amount” of their base pay.
Neiman Marcus is one of several national retailers said to be teetering on the edge of bankruptcy. J.C. Penney Company Inc. is also said to be mulling bankruptcy as an option to rework its finances and save money on its debt payment. Meanwhile, reports suggest Lord + Taylor is weighing bankruptcy restructuring, debt renegotiation and liquidation.