I'm not glad these stores are doing bad, but I just never understood how a pair of sneakers can cost $700 - $900 when I can buy a decent laptop with that kind of money.
Those sneakers are likely a Veblen good.
Neiman Marcus files for bankruptcy
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Re: Neiman Marcus files for bankruptcy
#32Earlier quoted context omitted.
Just my anecdotal impression; it's possible I'm biased by the extents of my bubble
You probably are. Go to Vegas and there are whole shopping malls where, to indulge in just a degree of hyperbole, I'd have to look hard to find something I could afford. Or at least would even consider affording.
And those malls are usually pretty empty, from my experience.
Re: Neiman Marcus files for bankruptcy
#33Earlier quoted context omitted.
Wow, why don't people wise up to this PE trick? Seems like creditors would learn their lesson after so many examples...
The "creditors" are usually another shell company of the PE firm, and the interest rates are absurd (I looked into the collapse of Maplin and it was something like 20%). It's basically an accounting trick to remove profits from the victim company in its declining years without having to pay tax on them.
I assume someone must lend the money (as it's not created from nothing). How does it work?
Re: Neiman Marcus files for bankruptcy
#34First guess: private equity? Neiman Marcus, laden with debt after a private equity takeover, Yup.
To be fair, if they had a PE takeover, they likely weren't in great shape before the takeover. The takeover gave them a little bit longer to live at least.
Re: Neiman Marcus files for bankruptcy
#35I'm not glad these stores are doing bad, but I just never understood how a pair of sneakers can cost $700 - $900 when I can buy a decent laptop with that kind of money.
Conspicuous consumption. The price is the point. It’s a signaling thing. In the case of something like sneakers with a big brand logo on them, it’s likely someone “low” trying to signal to their peers that they’ve made it (whether they have or not). See: Fussell’s Class, or The Official Preppy Handbook for signaling rules specific to the upper-middle and upper classes (very expensive sneakers with swooshes: big no. Somewhat expensive tennis shoes with wear patterns from serving: yes)
Re: Neiman Marcus files for bankruptcy
#36First guess: private equity? Neiman Marcus, laden with debt after a private equity takeover, Yup.
Wow, why don't people wise up to this PE trick? Seems like creditors would learn their lesson after so many examples...
Please explain? Why is there the association that private equity creates corporate debt?
Re: Neiman Marcus files for bankruptcy
#37Definitely a Brave New World. I guess we won't be getting our His and Hers gold plated, nuclear powered mini-subs this Christmas after all...
Re: Neiman Marcus files for bankruptcy
#38First guess: private equity? Neiman Marcus, laden with debt after a private equity takeover, Yup.
Wow, why don't people wise up to this PE trick? Seems like creditors would learn their lesson after so many examples...
People with other options don't take private equity buyouts. Some captains go down with their ships, others get on the first lifeboat.
Re: Neiman Marcus files for bankruptcy
#39Their nickname: needless markup
Re: Neiman Marcus files for bankruptcy
#40Earlier quoted context omitted.
Just my anecdotal impression; it's possible I'm biased by the extents of my bubble
You probably are. Go to Vegas and there are whole shopping malls where, to indulge in just a degree of hyperbole, I'd have to look hard to find something I could afford. Or at least would even consider affording.
In fairness, conspicuous consumption is one of the primary draws of Vegas. Probably not a very representative example.