US Luxury Department Store Neiman Marcus Files for Bankruptcy Protection

Facing Catastrophe Amid Debt Burden and COVID-19
Rising Crisis for Companies with Weak Financial Structures and Operating Bases

[Image source=AP Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] With the revival of the oil industry in Texas, USA, Neiman Marcus, a 113-year-old department store that has risen to become one of the top luxury department stores in the United States, has filed for bankruptcy protection after failing to overcome the COVID-19 pandemic.

On the 7th (local time), The Wall Street Journal (WSJ) reported that Neiman Marcus made this decision as it became difficult to repay its debt amounting to $5 billion (approximately 6 trillion KRW).

Neiman Marcus became the second retailer to collapse due to the impact of COVID-19, following the clothing company J.Crew, which had previously filed for bankruptcy protection. The Journal also reported that the Canadian shoe chain Aldo Group filed for bankruptcy protection on the same day. Another department store chain, JCPenney, is also reportedly on the brink of bankruptcy.

Neiman Marcus has decided to transfer ownership to creditors after the bankruptcy process. In return, creditors will provide $675 million in operating funds during the bankruptcy proceedings.

The downfall of Neiman Marcus was dealt a decisive blow by the COVID-19 crisis while it was already struggling with debts accumulated through mergers and acquisitions and falling behind in competition with online retailers such as Amazon. Neiman Marcus has currently closed all 43 stores in the United States and temporarily laid off most of its 14,000 employees.

Geoffroy van Raemdonck, CEO of Neiman Marcus, stated in a letter to customers, "Like most companies today, we are facing unprecedented business disruptions due to the COVID-19 pandemic," but added, "We will rise again as a much stronger company."

On the other hand, there are retailers preparing to overcome the COVID-19 crisis and reopen their stores. According to WSJ, Macy's and Gap are considering reopening this month. The WSJ also reported that these companies are concerned about how much consumers will spend once operations resume.

Declan Gahan, Director at S&P, predicted, "The virus will bring about a major transformation in the industry," adding, "Companies with weak financial structures or limited market dominance will face even greater difficulties."

This content was produced with the assistance of AI translation services.