During the Coronavirus Neiman Marcus has been forced to close 43 of his stores after filing for Bankruptcy. This has revealed itself after the brand relied on online marketing firms.The Luxury department chain is one of a few retailers such as J.Crew and JCPenney that filed for bankruptcy.
Is the pandemic the real issue ? Fashion retailers that are facing bankruptcy are companies that have had issues getting their revenue up before the pandemic hit.
Neiman Marcus hopes to come out of bankruptcy in the autumn with a $750 million deal from the creditors that provided the initial bankruptcy loan.
Applying for Cheaper 11 in the US has been very beneficial for a lot of retail companies as it means that they can start with a clean slate. This has proven to work as labels like Michael Kors and Tommy Hilfiger demonstrated this in 1993 and 1977. This is not the case in Europe as the law does not provide for debt financing on a super-priority basis, an absence that some view as a weakness.
Filing for bankruptcy can lead to a few outcomes, the end goal is to gain a clean slate so that the company can start from scratch without any repercussions. As part of the reshaping of the business, the acceptor has decided to exchange for cancelling $4 billion of debt and is planning on re opening his store. Looking at the bigger picture filing for chapter 11 has been doubtful as there has been about 260,000 US stores that have closed over the past month, according to Global Data Retail.
Will fashion retail go back to how it was before ? That is the real question. Customers having to wear face masks, gloves and be curious. CEO’s hoping this will go back to normal, it won’t is the harsh truth. The population's fear of going back to retail stores will be the next step that we have to adapted too in the fashion retail business. Are the people going to shop again ?
Will online sales be the way forward?
By Adelina Ademi