The luxury retailer Neiman Marcus could soon declare bankruptcy, according to media reports. It has already temporarily closed its stores and furloughed many employees during the COVID-19 outbreak.
As one former Neiman Marcus executive put it, the epidemic has contributed to the company’s struggles, but is not the cause.
Neiman As A National And Dallas Icon
Neiman Marcus’ extravagance has long made the company a cultural touchstone, a quick stand-in for wealth and conspicuous consumption. Mainstream television comedies from The Golden Girls to Girls have used it as a punchline.
The store’s fame and notoriety didn’t come only because it sold expensive stuff. A visit to Neiman Marcus was a unique and enthralling experience.
“Even for a child it was a magical place,” said Tracy Achor Hayes, former fashion editor at the Dallas Morning News. “It wasn’t just, you know, expensive clothes for ladies. It was [kind] of a wonderland.”
Achor Hayes also did two stints as a Neiman Marcus employee, most recently as editorial director. She said the store, founded in 1907, rose to prominence because it was a high-end place to shop in a huge state overflowing with oil money. Fashion-seekers with cash came from all over, helping put Dallas on the radar of any designer with national or international business.
“They would all note Dallas is a magnet for fashion and a place that’s important to their business,” she said. “That certainly wouldn’t have been possible without Neiman Marcus.”
Hayes also credits the creativity of Stanley Marcus, son of one of the founders, for the company’s rise.
Thomas E. Alexander wrote a book about Marcus, and also worked for him as the company’s head of marketing.
“A New Yorker article one time, back when Stanley was selling the store, said he was the first one to sell the sizzle before he sold the merchandise,” Alexander recalled. “I think that’s very true.”
Ideas like the yearly fortnight celebration and the over-the-top Christmas catalogue added a certain whimsy, Alexander said.
Both Hayes and Alexander think at least some of the old magic has been lost in the decades since Marcus left the helm.
The company has certainly struggled financially.
Neiman Marcus temporarily closed all its 43 stores and furloughed thousands of workers in the wake of the coronavirus epidemic. Moody’s and Standard and Poor’s recently downgraded the company’s credit rating.
Its financial problems didn’t start with the outbreak, however.
“That has contributed to it but that is not the cause of it at all,” Alexander said.
A big cause is that Neiman Marcus has almost 5 billion dollars of debt, partly the result of leveraged buyouts in 2005 and 2013. Sales were up and down in recent years, but experts say even decent sales can mean little when you have so much debt. Basically, there just isn’t leftover money to invest in the company.
A Neiman Marcus Group representative declined to comment.
Can Neiman’s Bounce Back?
Jacquelyn Thomas, marketing professor at Southern Methodist University’s Cox School of Business, said Neiman’s luxury brand gives it a chance to recover from money problems.
“Its brand is not driven just simply by its name itself. It’s also driven by the items and services that it offers to its potential consumers,” she said.
In other words, customers of fancy stores like Neiman Marcus go there for exclusive products or personalized service. The word “bankruptcy” doesn’t necessarily change that.
And the immediate shift to online buying during COVID-19 may not be a death knell, either.
“These different platforms, whether it’s the brick and mortar platform, whether it’s the online platform, or back in the day it was the catalogue platform, they actually operate synergistically, as opposed to in isolation,” Thomas said.
Still, there’s no denying the current closure of brick-and-mortar stores is painful for employees and investors. Thomas mentioned numbers from last year that showed over 80% of retail shopping was still happening in-store.
The parent company of Saks Fifth Avenue has been interested in buying Neiman Marcus. Hayes said this might be the opening.
“[Of] course that would break my heart, as [somebody] who grew up in Dallas or Texas, to see Neiman’s absorbed,” she said.
‘Saks Neiman Marcus’ just doesn’t have the same sizzle.