Neiman Marcus files for bankruptcy • Hacker News Board

Re: Neiman Marcus files for bankruptcy

#51

Post by notyourday » Thu, May 07, 2020, 6:12 PM UTC

adventured wrote: post #42

_bxg1 wrote: post #16

Earlier quoted context omitted.

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 fo…

While NM sold the likes of LVMH here it mostly made money by selling comfortable middle market rather than the top tier luxury because of the buying agreements:

The way the buying is structured, retailers cannot complete with flagships of the luxury brands they carry within a certain distance which means that the stored NYC, LA, Boston, SF, Miami which should be the most profitable can't carry the hot items of the seasons if the flagships carry them. Since flagships are not just retail but marketing and demo stores flagships always carry all the hot items.

The mid-tier market outsourced manufacturing to the same factories that at best create wear it a couple of times before it falls apart products while charging 3x-10x of the likes of Zara. That market has been shrinking for years as the likes of Zara, H&M and others cleaned up the lower end and started moving up.

Also the lion's share of luxury growth is coming from outside of the US, namely from Asia which is not accessible to NM.

Re: Neiman Marcus files for bankruptcy

#52

Post by blaser-waffle » Thu, May 07, 2020, 6:14 PM UTC

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?

A long history of coprorate raiders using such practices, e.g. T Boone Pickins, Bain Capital, et al

For example: https://www.investopedia.com/articles/markets/111015/10-most...

Re: Neiman Marcus files for bankruptcy

#53

Post by colechristensen » Thu, May 07, 2020, 6:14 PM UTC

_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.

I went in a Neiman Marcus a few months ago and was struck by how much they seemed to be selling "luxury". Like luxury apartments or Las Vegas facades, it all seemed like shoddy but shiny. I was asking people who their target consumer is and there really wasn't an answer. I didn't recognize any but a few of the brands and most of them seemed like they'd been invented for a thirty second scene in a TV show.

Re: Neiman Marcus files for bankruptcy

#54

Post by every » Thu, May 07, 2020, 6:14 PM UTC

every wrote: post #37

Definitely 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...

Apparently some here are unfamiliar with this holiday tradition:

https://www.mentalfloss.com/article/89283/stories-behind-12-...

Re: Neiman Marcus files for bankruptcy

#55

Post by jjoonathan » Thu, May 07, 2020, 6:15 PM UTC

onlyrealcuzzo wrote: post #13

contemporary343 wrote: post #7

Earlier quoted context omitted.

Same with J Crew.. real value creators these PE people are

PE does create value! They take over companies that are in a liquidity crisis. They bring buckets of cash with them that gets the company out of the liquidity crisis. Suddenly, the value of the company increases dramatically because creditors can't take advantage of it anymore. PE doesn't takeover companies they think can make it. Regular investors would do that. They take over companies that everyone knows are doome…

No. What you described is liquidation.

PE is all about maintaining the pretense of a turnaround so that liquidation proceeds can go to management (the PE firm) rather than to outstanding obligations or investors/shareholders.

It's the white-collar equivalent of walking out with the coffee machine and an aeron chair -- so, naturally, 100x worse and 100x less illegal.

Re: Neiman Marcus files for bankruptcy

#56

Post by [deleted] » Thu, May 07, 2020, 6:15 PM UTC

rwmj wrote: post #33

pjc50 wrote: post #19

Earlier quoted context omitted.

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?

[deleted]

Re: Neiman Marcus files for bankruptcy

#57

Post by Ididntdothis » Thu, May 07, 2020, 6:16 PM UTC

johntiger1 wrote: post #5

sp332 wrote: post #3

First 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...

I am pretty sure except the employees all participants are making good money off these deals.

Re: Neiman Marcus files for bankruptcy

#58

Post by whymauri » Thu, May 07, 2020, 6:19 PM UTC

Eric_WVGG wrote: post #48

jrumbut wrote: post #6

Earlier quoted context omitted.

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.

I read this as 'luxury' brands (Neiman Marcus) becoming asymptotically indistinguishable from low- or mid-tier brands.

Re: Neiman Marcus files for bankruptcy

#59

Post by _bxg1 » Thu, May 07, 2020, 6:23 PM UTC

colechristensen wrote: post #53

_bxg1 wrote: post #16

Earlier quoted context omitted.

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.

I went in a Neiman Marcus a few months ago and was struck by how much they seemed to be selling "luxury". Like luxury apartments or Las Vegas facades, it all seemed like shoddy but shiny. I was asking people who their target consumer is and there really wasn't an answer. I didn't recognize any but a few of the brands and most of them seemed like they'd been invented for a thirty second scene in a TV show.

Exactly. People 20-30 years ago ate that stuff up; these days I think most people see it as garish and tacky.

Wealth signaling absolutely still happens, but today the facades it tends to orbit around involve words like "minimal", "natural", "open", "honest". Organic groceries, modernist houses, meditation retreats to exotic places, environmentally-friendly vehicles, freedom from clutter and complication. These, sadly, are unattainable for many people. And so of course, brands have co-opted and packaged up that fact to be sold as a set of signals that make people feel good about themselves in comparison to others.

Re: Neiman Marcus files for bankruptcy

#60

Post by _0w8t » Thu, May 07, 2020, 6:24 PM UTC

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.…

It reminded me a Russian anecdote about so called newly rich Russian businessmen. For those the whole life was constant signaling.

One newly rich Russian shows another a tie he bought a minute ago for 3000 USD. That guy replied, “This is stupid. You had to go to the shop over there. They sell the same tie for 5000 USD”.