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Neiman Marcus files for bankruptcy

reuters.com

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Re: Neiman Marcus files for bankruptcy

#41

Post by qppo »

karatestomp wrote: post #4
bruceb wrote: post #2

I think even without Covid, its harder to tell what is luxury in apparel. There have been a couple articles on this. There used to be a clear difference between the look of clothes at different retailers but not as much anymore. Walk through Neiman Marcus, Nordstrom, Macy's, H&M, and they start to blend together. Doesnt mean no difference but maybe not enough to always charge a premium.

They all seem to have decided on a "market expansion at the expense of brand dilution" strategy. Ditto most of the formerly-consistently-good clothing brands. I'm not really sure which stores/brands replace the ones that have done this, these days. [EDIT] I suspect part of this is because the cost of actually-good clothes hasn't dropped like shitty-clothes costs have, because (this is further speculation on my part)…

Well and really inefficient land usage.

Re: Neiman Marcus files for bankruptcy

#42

Post by adventured »

_bxg1 wrote: post #16
bruceb wrote: post #2

I think even without Covid, its harder to tell what is luxury in apparel. There have been a couple articles on this. There used to be a clear difference between the look of clothes at different retailers but not as much anymore. Walk through Neiman Marcus, Nordstrom, Macy's, H&M, and they start to blend together. Doesnt mean no difference but maybe not enough to always charge a premium.

There's also been a huge trend reversal on "conspicuous consumption". Even the wealthy now do their wealth-signaling through minimalism, instead of flash and excess. Self-proclaimed "luxury brands" have a dwindling market.

> Self-proclaimed "luxury brands" have a dwindling market.

There's no evidence that supports that as a comprehensive statement. It very much varies from brand to brand and situation to situation.

The king of luxury, Bernard Arnault (LVMH), recently became one of the richest people on the planet (current net worth of $76 billion) because luxury has been massively expansive over the past decade. His wealth increased four fold over eight years up to the pandemic.

Another person in the same luxury boat as Arnault is Francois Pinault. $31 billion net worth. His wealth also increased four fold in roughly eight years, from $11b to $43b, up to the pandemic. Don't tell these people luxury is dwindling - their outcomes indicate it has boomed.

Ferrari's business has doubled in size and they have a market cap higher than Ford or GM because luxury has done so extraordinarily well over the last decade. Their stock hasn't crashed during the pandemic, unlike most auto stocks. Do you know why? The luxury buyers are not hurting like everyone else is (thus far). Times are good for Ferrari.

So what situations are causing this? China for one. And more broadly, the emergence of greater wealth all around the world, rather than it mostly being contained to the well-established developed nations of the post WW2 era. That global wealth increase is not matched by there being a lot more high-end luxury goods makers like Ferrari or LVMH, so the result is they've spent most of the past decade dealing with more business than they can easily keep up with.

Re: Neiman Marcus files for bankruptcy

#43

Post by fl0wenol »

karatestomp wrote: post #4
bruceb wrote: post #2

I think even without Covid, its harder to tell what is luxury in apparel. There have been a couple articles on this. There used to be a clear difference between the look of clothes at different retailers but not as much anymore. Walk through Neiman Marcus, Nordstrom, Macy's, H&M, and they start to blend together. Doesnt mean no difference but maybe not enough to always charge a premium.

They all seem to have decided on a "market expansion at the expense of brand dilution" strategy. Ditto most of the formerly-consistently-good clothing brands. I'm not really sure which stores/brands replace the ones that have done this, these days. [EDIT] I suspect part of this is because the cost of actually-good clothes hasn't dropped like shitty-clothes costs have, because (this is further speculation on my part)…

With gig work and the internet, you can find a tailor or contact someone on Etsy for less than a boutique experience.

Off the rack is globally commoditized now, so you're paying for a trendy location, labels, personal shoppers, or design IP. If those things don't matter to you...

Re: Neiman Marcus files for bankruptcy

#44

Post by devchix »

Merrill wrote: post #11

“It’s Collapsing Violently”: Coronavirus Is Creating a Fast Fashion Nightmare https://www.gq.com/story/coronavirus-fast-fashion-dana-thoma...

The idea of "fast fashion" is noxious! All those faddish things worn for a season then to take up space in landfills. I don't think I've found affordable clothes made to last anymore (a good quality wool sweater, maybe?) I can't remember when was the last time I was at the mall, or what was the last thing I really really like to buy to wear.

Re: Neiman Marcus files for bankruptcy

#45

Post by whatok »

razster wrote: post #8
johntiger1 wrote: post #5

Earlier 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...

Because the creditors make money off it as well.

Can you explain how the creditors of 4bn in Neiman Marcus debt are making money off this?

Re: Neiman Marcus files for bankruptcy

#46

Post by notyourday »

bruceb wrote: post #2

I think even without Covid, its harder to tell what is luxury in apparel. There have been a couple articles on this. There used to be a clear difference between the look of clothes at different retailers but not as much anymore. Walk through Neiman Marcus, Nordstrom, Macy's, H&M, and they start to blend together. Doesnt mean no difference but maybe not enough to always charge a premium.

> There used to be a clear difference between the look of clothes at different retailers but not as much anymore.

That's because nearly all the brands sold at places like NM have outsourced manufacturing to the same 3rd rate factories in Asia and Latin America and are riding on a name and those names these days command less premium than Supreme.

Re: Neiman Marcus files for bankruptcy

#47

Post by popup21 »

karatestomp wrote: post #35
b1gtuna wrote: post #26

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.

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.…

> The Official Preppy Handbook

LOL, classic WASP literature. I haven't thought of this book since the mid-80s! It's a hilarious read.

Re: Neiman Marcus files for bankruptcy

#48

Post by Eric_WVGG »

jrumbut wrote: post #6
bruceb wrote: post #2

I think even without Covid, its harder to tell what is luxury in apparel. There have been a couple articles on this. There used to be a clear difference between the look of clothes at different retailers but not as much anymore. Walk through Neiman Marcus, Nordstrom, Macy's, H&M, and they start to blend together. Doesnt mean no difference but maybe not enough to always charge a premium.

I had never put my finger on this before but you're right. Also it's a total crap shoot on manufacturing quality.

> Walk through Neiman Marcus, Nordstrom, Macy's, H&M, and they start to blend together.

But are any of these luxury brands? Nordstrom might be upper-tier retail but it’s hardly luxury.

Re: Neiman Marcus files for bankruptcy

#49

Post by cik »

karatestomp wrote: post #4
bruceb wrote: post #2

I think even without Covid, its harder to tell what is luxury in apparel. There have been a couple articles on this. There used to be a clear difference between the look of clothes at different retailers but not as much anymore. Walk through Neiman Marcus, Nordstrom, Macy's, H&M, and they start to blend together. Doesnt mean no difference but maybe not enough to always charge a premium.

They all seem to have decided on a "market expansion at the expense of brand dilution" strategy. Ditto most of the formerly-consistently-good clothing brands. I'm not really sure which stores/brands replace the ones that have done this, these days. [EDIT] I suspect part of this is because the cost of actually-good clothes hasn't dropped like shitty-clothes costs have, because (this is further speculation on my part)…

You'd be surprised. The cost of rubbish clothing has fallen, but then the cost of very reasonable mid-quality has dramatically fallen. I used to buy Levis, then Gap for mid range. Now, I get the same quality (and literally the same factory) jeans from Joe Fresh, for 1/4th to 1/5th of the price.

Suit shirts are the same. An online tailor I've been using for a decade sells shirts at half the price of Banana Republic (comparing to Canada), but mine are bespoke, perfectly fitted, and I can make choices from a website. To wit, I've stopped buying shirts in stores and now just use their service... since 2008. To make matters worse for retailers, his quality has improved at the price point.

Retail is hard.

Re: Neiman Marcus files for bankruptcy

#50

Post by topkai22 »

devchix wrote: post #36
johntiger1 wrote: post #5

Earlier 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...

Please explain? Why is there the association that private equity creates corporate debt?

Private equity companies exist to purchase existing companies from their current owners and then run them better/extract more value from them. The canonical example of this is purchasing a public company by acquiring all outstanding shares.

This is often a fantastically expensive enterprise that requires that the new owners raise tons of money. The new owners do this by structuring a deal where the company will take out a ton of debt (basically its entire market capitalization of the company, plus a premium) to purchase the outstanding shares. This is known as a leveraged buyout (LBO).

So if a public company has $100M in outstanding shares and zero debt before they go private, by going private the private company will now have $100M of debt (rough numbers, illustrative but not necessarily realistic). That's why going private often results in dramatic sell offs and cost cutting- the new company needs to get the debt load down, and fast.

Definitely read Barbarians at the Gates, it's a great book and explains a lot about private equity from a dramatic case in the 80s.

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