Neiman Marcus files for bankruptcy, citing 'inexorable' pressure from coronavirus

• Neiman Marcus has filed for bankruptcy protection.
• The luxury retailer is seeking to eliminate $4 billion of its existing $5.1 billion in debt.
• The department store had been forced to temporarily close its locations amid the coronavirus pandemic.
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The luxury department store retailer Neiman Marcus Group filed for chapter 11 bankruptcy protection on Thursday.

In a statement on the filing, the company's CEO, Geoffroy van Raemdonck, cited "inexorable pressure" from the coronavirus pandemic.

"Prior to COVID-19, Neiman Marcus Group was making solid progress on our journey to long-term profitable and sustainable growth," said Raemdonck. "We have grown our unrivaled luxury customer base, expanded our industry-leading customer relationships, achieved higher omni-channel penetration, and made meaningful strides in our transformation to become the preeminent luxury customer platform."

"However, like most businesses today, we are facing unprecedented disruption caused by the COVID-19 pandemic, which has placed inexorable pressure on our business," he continued.

The company is seeking to eliminate about $4 billion of its $5.1 billion in existing debt and said it plans to emerge from the bankruptcy process in early fall 2020.

The retailer had been forced to temporarily close all 43 of its Neiman Marcus department stores across the US, as well as 24 Last Call stores and its two Bergdorf Goodman stores, due to the coronavirus pandemic. It had also furloughed most of its employees.

Reuters reported on April 19 that the department store chain was considering bankruptcy proceedings, noting that the retailer had missed debt payments that were due the week before. Neiman Marcus has about $4.8 billion in debt, according to Standard & Poor's credit ratings cited by Reuters.

The first Neiman Marcus store opened in 1907. It acquired the luxury department store Bergdorf Goodman in 1972.

Like other department stores, it has been criticized for being slow to adapt to online shopping and consumers' preferences for discounts.

Neiman Marcus is not the only department store to find itself in a difficult financial situation as the pandemic disrupts business as usual. JCPenney is also reportedly considering bankruptcy, while Macy's and Nordstrom have been seeking new financing.

Department stores have struggled for some time as foot traffic to malls has fallen and shopping habits have changed. In many cases, their large real estate footprint has become a liability. Some, like Nordstrom and Macy's, have turned to their off-price store models to boost sales. They have also turned to pop-ups and experiential offerings, like JCPenney's opening of hundreds of Sephora store-in-stores.