Have we entered the real retail apocalypse? The Neiman Marcus Group is preparing to seek bankruptcy protection as soon as this week, Reuters reports. The company has about $4.8 billion in debt and skipped millions of dollars in payments last week.
Brick and mortar retail has been on the decline since the Great Recession of 2008, with thousands of stores shuttering every year and 1.3 million retail employees losing their jobs. Coronavirus is expected to hasten this decline. Experts believe we’re at the start of another recession, so it is still unclear how bad it will be for retailers. But we’re already starting to see some victims.
Neiman Marcus has a very large brick and mortar footprint, which extends to 43 stores, spanning the Neiman Marcus, Last Call, and Bergdorf Goodman brands. Most of these stores have been shuttered since March, as they are deemed non-essential businesses and have been forced to close to curb the spread of the coronavirus. The company has furloughed most of its 14,000 employees.
Neiman Marcus is currently in the process of working to land a loan of hundreds of millions of dollars from its current creditors that would allow it to continue operating throughout the bankruptcy proceeding. This cash would allow it to eventually open stores when social isolation restrictions have been lifted.
This bankruptcy would make the Neiman Marcus Group, “the first major U.S. department store operator to succumb to the economic fallout from the coronavirus outbreak,” Reuters reports. But others may follow. J.C. Penney is reportedly considering filing for bankruptcy, while Macy’s and Nordstrom are trying to secure new financing to stay afloat during this period.
We reached out to the Neiman Marcus Group but the company declined to comment.