Dive Brief:

• Neiman Marcus has been in touch with lenders about possibly garnering a loan and restructuring through bankruptcy, according to a report from Bloomberg Law. A spokesperson for Neiman Marcus Group didn’t immediately return Retail Dive’s request for comment.
• The privately held retailer last year extended some loan maturities, then managed to lighten its load enough to end reports to the Securities and Exchange Commission, but retains around $4.5 billion in debt.
• Earlier this month the retailer, which also runs Bergdorf Goodman, announced the shutdown of its Last Call off-price operation, slashing 500 jobs there as well as laying off 250 store employees. Late last year the company also cut 100 corporate jobs.

Dive Insight:

Massive debt has dogged Neiman Marcus for years now, and the upscale department store has struggled to find a way out. Three years ago the retailer abandoned plans for an initial public offering, and since then has tussled with lenders over the fate of its luxury e-commerce unit, MyTheresa.

Industrywide, according to Moody’s, the company is one of just six retailers where distressed debt is concentrated, along with J.C. Penney, Rite Aid, J. Crew Group, Academy, Ltd. and Ascena Retail Group. “They represent nearly 77% of the $24 billion in outstanding distressed (Caa1 and lower) retail and apparel debt,” according to a March 17 emailed note from Moody’s Vice President-Senior Credit Officer Mickey Chadha.

The closure of its Last Call off-price unit is a move that goes against the tide and eliminates one of the most successful areas of apparel retail, but was designed to enable the retailer to focus on higher-spending customers in full-price stores. However, that strategy is out of reach at the moment, in light of temporary closures of all stores, full price and otherwise, forced by the COVID-19 pandemic.