I’m posting on this side over quotes like this:

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The company joins a long list of national retailers that have filed for bankruptcy in recent years. Like Neiman Marcus [founded in 1907] many of them were purchased by private-equity firms and hedge funds in the mid-2000s, when a booming ecnomy and low interest rates made leveraged buyouts particularly attractive. The deals were financed using large swaths of debt, under the assumption that the good times would continue and companies would grow.

So, you get a bank or vulture capitalists to loan you a whole shtload of money, buy a previously successful retailer and take it private, and default on the loans or unload it before it inevitably goes bankrupt.

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Many began defaulting on interest payments and giants like Sears, Toys R Us and Barneys New York, which were once among the most iconic names in retail, tumbled into bankruptcy.

In the case of Sears, I would suggest there was never a serious intent on the buyer’s part to make a go of a long-successful company - it was easier to milk it to death and sell the dismembered parts. In fact, N-M was doing okay sales-wise:

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In fiscal year 2018, Neiman Marcus posted a profit of $251 million on revenue of $4.9 billion. Sales have grown for six of the past seven quarters.

“The profit margins are actually pretty good...but when you have all your earnings eaten up by interest payments, there’s an inevitable crisis.”

...and lots of regular folks lose their jobs and benefits. I guess this is the “creative destruction” of capitalism, but I wish it didn’t appear to be such a lucrative and frequently-abused scheme of financial wheeler-dealers.

.....seems like they will all fall like dominoes......J.C. Penney.....Sears.......are probably next......

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I reject your reality and substitute my own!

Retail, Restaurants, Services... businesses are dying off right and left. In a 'Just In Time' world, closing for even a month will kill them. Franchise operations of larger corporations are dying off as well. In my immediate area three "Subway" stores are now permanently closed. Gonna have to make my own sammiches.

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pdq
In the case of Sears, I would suggest there was never a serious intent on the buyer’s part to make a go of a long-successful company - it was easier to milk it to death and sell the dismembered parts.

For Sears, I would put the failure to the buyer's ideological leanings and prior business experience that made him an unsuitable person to be running a retail operation at all. He is not just taking down Sears, but also Kmart.

For the second. Kmart, I sometimes wonder what the Kresge family thinks of this. Back in my teens a cousin of the owners and his sons was involved in the Scout troop I was a member of.

This is why Amazon is king. You get basically a few people to run the whole show, which gives them power to survive. The old retailers seldom really had that structure, and it opened them up to hedge managers and other unrelated owners who simply traded the brand like a stock market asset on a sheet of paper. This how traditional public capitalism dies and gets consolidated into quasi private ownership.

Too bad, one less competitor for Amazon.

i accompanied a friend to Neiman-Marcus once. She bought a skirt, a blouse, and a scarf. The total was $800. She noticed my quiet and asked why. I told her those three items cost as much as a month's rent for me. This was probably around 1992.

My friend is wealthy but a progressive activist who does a tremendous amount of good with her resources. Still, it was a sobering moment for both of us.

I don't think NM is an Amazon competitor. Totally different crowd for the items they sell.

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"Success isn't about how much money you make. It is about the difference you make in people's lives."--Michelle Obama



Edited 1 time(s). Last edit at 05/07/2020 01:49PM by graylocks.

Neimans has been in financial trouble for several years. It was only a matter of time.

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samintx
Neimans has been in financial trouble for several years. It was only a matter of time.

That may be true, but they were making a profit. Just not enough of one to cover the enormous amount of debt that they were saddled with when they were taken over.