Luxury retailer Neiman Marcus has filed for Chapter 11 bankruptcy, becoming the first department store to do so amid the COVID-19 pandemic that forced most businesses across the country to close down.
The retailer said it plans to undergo a financial restructuring, while substantially reducing its debt load.
It is now the second major retailer to file for bankruptcy protection during the pandemic, following fashion brand J.Crew's filing earlier this week.
A number of other major retailers may have to follow suit in the near future. Gap Inc. has warned it is running out of cash and is looking for an infusion and J.C. Penney is facing problems as well.
J.C. Penney, which had been trying to claw its way back after a disastrous reinvention plan in 2013, recently elected not to make a $12 million debt payment. That is setting it on the path of a potential bankruptcy.
The new coronavirus forced the Dallas-based retailer to close all 43 of its stores in March, the New York Times reported. The company said Thursday that the Chapter 11 bankruptcy process will not impact the timing of store re-openings.
Shortly after its bankruptcy announcement, Neiman Marcus also shared a message to customers that explained Thursday's move is "not a liquidation of our business."
"Neiman Marcus has always focused on delivering the most exceptional and personal luxury experiences, and we are proud of our history which spans over 100 years. But the unprecedented global crisis from the COVID-19 pandemic ultimately made it impossible to continue to service our debt and maintain normal operations," the Neiman Marcus Group said in a tweet.
Neiman Marcus Group CEO Geoffroy van Raemdonck said in a statement that the company had been making progress toward long-term profitability and sustainable growth before the coronavirus pandemic struck.
"However, like most businesses today, we are facing unprecedented disruption caused by the COVID-19 pandemic, which has placed inexorable pressure on our business," van Raemdonck said.
Neiman Marcus said Thursday it has secured $675 million in financing from its creditors to fund operations in the meantime and the company expects to emerge from bankruptcy in the fall.