The luxury department store chain Neiman Marcus filed for bankruptcy protection Thursday, becoming the second major retailer after J.Crew to seek reorganization this week as the industry buckles under widespread store closures.
"Like most businesses today, we are facing unprecedented disruption caused by the COVID-19 pandemic, which has placed inexorable pressure on our business," Geoffroy van Raemdonck, chairman and CEO of Neiman Marcus Group, said in a statement.
The Dallas-based chain filed for Chapter 11 reorganization in U.S. Bankruptcy Court in Houston. It has secured $675 million in financing to get it through its reorganization.
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The luxury store chain, which operates 43 Neiman Marcus stores, 22 Last Call stores and two Bergdorf Goodman stores, has been burdened with nearly $5 billion in debt in part because of two leveraged buyouts in less than 10 years.
The company has clothed some of the world's wealthiest people in runway brands from Alexander McQueen to Chanel. Founded in 1907 by Stanley Marcus, it aimed to bring Parisian fashion taste to America's upper echelons. Its department stores were filled with shining $30,000 Rolex watches, $12,000 Tom Ford clutches and $90,000 fur coats. The retailer is known for its glossy Christmas catalog of excessive fantasy gifts and once featured a $7 million yacht.
But consumer behaviors have changed with the advent of online shopping and value shopping. Leading up to the pandemic, the company's sales and revenue tumbled as competition increased for its luxury consumer base. Neiman Marcus reported a loss of $31.2 million in July, compared with a net loss of $19.9 million the previous year.
Market conditions have been brutal for the retail industry over the last several weeks. Like other retailers, Neiman Marcus stores have been closed since mid-March as state governors issued stay-at-home orders to stem infections. The company furloughed almost all of its 14,000 employees March 30. Stores will be closed through May 31, the company said.
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The company expects to emerge from bankruptcy in early fall.
"We will emerge a far stronger company," van Raemdonck said. "In a world that is changing, we are uniquely positioned to give our brand partners access to our loyal luxury customers like no other company."