Washington: Neiman Marcus became the second American retailer to file for bankruptcy this week, as business across the United States are bleeding due to economic fallout of COVID-19 pandemic. The luxury retail chain filed for bankruptcy on Thursday, citing the mounting pool of debts and no conceivable plan to make profit at the earliest. Donald Trump Predicts 'Great' Economic Rebound As US Tops 1 Million COVID-19 Cases.
Established in 1907, Neiman Marcus had earned an identity across the US for the class of luxurious services and products it offered. The company was associated with the country's elite and high-income class. Over the past decade, however, it faced a scathing competition due to increase in the number of rivals and the e-commerce outlets delving into the luxury sector.
Since late March, when several US provinces began declaring a lockdown to contain the virus outbreak, Neiman Marcus was forced to close down 43 of its stores across the country. The company also ended furloughing over 14,000 workers.
"Like most businesses today, we are facing unprecedented disruption caused by the COVID-19 pandemic, which has placed inexorable pressure on our business," said a statement issued by CEO Geoffroy van Raemdonck.
Neiman Marcus has secured a funding of $675 million, in addition to an amount of $750 million which the consortium of creditors have assured to pump into the company after it exits bankruptcy. The luxury retailer, with a rejigged ownership and management, is expected to resume operations after the COVID-19 threat subsides.
“The binding agreement from our creditors gives us additional liquidity to operate the business during the pandemic and the financial flexibility to accelerate our transformation. We will emerge a far stronger company," Raemdonck said.
Neiman Marcus is the second retailer to file for bankruptcy this week. On Tuesday, J Crew announced that it would initiate the bankruptcy process as its business activities have been choked due to the pandemic. Other American stores including JC Penney are also considering the option as the chances of their revival are projected It is likely not the last. J.C. Penney has also been exploring filing for bankruptcy. Many others are likewise forced to cope with sales that have been cut off and uncertainty over how people will shop in the future
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