In March 2019, the luxury retailer Neiman Marcus opened its first outpost in Manhattan. Spread over three floors and 188,000 square feet, the store was an anchor tenant of the gleaming Hudson Yards development and, the company’s chief executive said, a new kind of “retail theater.” It boasted in-house aestheticians, live cooking and mixology demonstrations, and fitting rooms complete with interactive touch screens.

The executive, Geoffroy van Raemdonck, was about a year into the job and had already hired a slew of new executives, including a chief for the company’s other jewel in New York, Bergdorf Goodman. Each of the hires, he said in a late November interview with The New York Times, has “a passion for transforming our business.”

“They all believe that not only are we going to delight our customers by bringing to them unique and curated experiences, but they really believe that we are traveling a new course for how the retail industry and department store are transforming themselves,” Mr. van Raemdonck said.

On Thursday, all of that came to an abrupt halt when Neiman Marcus became the first major department store group to file for bankruptcy protection during the coronavirus pandemic. It’s a stunning fall that follows the collapse of Barneys New York late last year and comes as shadows gather over chains like Lord & Taylor and J.C. Penney.

As part of the bankruptcy filing, Dallas-based Neiman Marcus said it has secured $675 million in financing from a majority of creditors to keep operating during the restructuring. Those creditors now hold over two-thirds of the company’s debt.

In a letter to customers, Van Raemdonck stressed that Neiman Marcus had no plans to liquidate. He said the retailer would continue to honor gift cards and credits as well as accept product returns. Service on the company’s websites also will not be interrupted. The company said it is evaluating locations but did not specify if it would close any stores. The bankruptcy filing is a big blow to private equity firm Ares Management and the Canada Pension Plan Investment Board, which bought Neiman Marcus in 2013 for $6 billion.

More than 60% of U.S. retailers have temporarily closed since March, but department stores were already in a weakened state long before then. Americans are no longer interested in doing all their shopping under one roof, instead picking and choosing items like shoes or tops. When they do buy clothes, they can head to T.J. Maxx and online retailers.

Todd Horwitz Chief Strategist
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