The Bloodletting among Retailers Simply Doesn’t Let Up

Monday, March 6, 2017
By Paul Martin

by Wolf Richter
WolfStreet.com
Mar 5, 2017

A very busy day in Brick-and-Mortar Fiasco Land.

Neiman Marcus, the Texas-based luxury retailer with 42 stores around the country and two Bergdorf Goodman stores in Manhattan, is in no immediate risk of bankruptcy, the sources told Reuters on Friday, though it has hired investment bank Lazard Ltd to help restructuring its nearly $5 billion in debt.

When this news emerged, Neiman Marcus unsecured bonds due in 2021 plunged 7% to 54 cents on the dollar, according to Thomson Reuters, and its $3 billion term loan fell 5% to 77 cents on the dollar.

Earlier this year, Neiman Marcus scrapped its IPO entirely, after having delayed it in 2015 when its difficulties could no longer be swept under the rug. In December that year, it reported its first quarterly sales decline since 2009, with same-store sales dropping 5.6%. There was plenty of red ink. And layoffs commenced.

At the time, CEO Karen Katz blamed the oil and gas bust in which wealthy shoppers in Texas were tangled up. She also blamed the “strong dollar” that prevented foreign tourists from splurging at its stores in the gateway cities Honolulu, San Francisco, Las Vegas, New York, Washington, and Miami.

As so many times in the brick-and-mortar retail fiasco, there’s a private-equity firm behind it: In 2005, Neiman Marcus was subject of a leveraged buyout. It’s now owned by Ares Capital and the Canadian Pension Plan Investment Board. Their hopes of an elegant exit via an IPO have been scrapped.

But the Neiman Marcus restructuring news wasn’t enough for just a regular brick-and-mortar Friday.

“People with knowledge of the matter” told Bloomberg on Friday that appliances and electronics retailer HHGregg – which had announced on Thursday that it would close 88 of its 220 stores, shutter three distribution centers, and shed 1,500 jobs – is preparing to file for Chapter 11 bankruptcy.

The Rest…HERE

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