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Neiman Marcus files for bankruptcy

reuters.com

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Re: Neiman Marcus files for bankruptcy

#121

Post by popup21 »

karatestomp wrote: post #71
popup21 wrote: post #47

Earlier quoted context omitted.

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

Some of it (and Class ) is just plain good advice. Prefer nice clothes/things, but use the hell out of them and don’t be afraid to repair them. Don’t comment on how nice something someone bought is (this middle-class habit seems really weird after having it pointed out). Avoid “collectibles” and for god’s sake don’t think of them as an investment. That sort of thing.

I wore my copy out actually. That book single handily was responsible for my brief infatuated phase for wearing polos and no-sock penny-loafers while sporting a locust valley lockjaw. I'm laughing about it as I write this...

Re: Neiman Marcus files for bankruptcy

#122

Post by _bxg1 »

Loughla wrote: post #69
colechristensen wrote: post #53

Earlier quoted context omitted.

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.

>I went in a Neiman Marcus [. . .] I was asking people who their target consumer is [. . .] This strikes me as hilarious for some reason. I'm not trying to be difficult, but did you honestly think anyone working on the salesfloor of the store to know what their target consumer was? That is a corporate strategy. In the store, their target is whoever comes in the door. They don't set style, they don't buy trends or fas…

Many people on the store floor are primarily salespeople. They may not know the corporate strategy, but they know who comes in and what it takes to sell something to them.

Re: Neiman Marcus files for bankruptcy

#123

Post by takeda »

whatok wrote: post #88
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.

How does a PE firm make money if a shell company of theirs is losing money while another arm of it makes money? Also, if the only financing a business can access is basically consumer credit card rates, they probably weren't a going concern.

When I got a mortgage and refinanced. In both cases shortly after I got letter that my debt was purchased by someone else and from now on my payments supposed to go to a different company.

I suspect it is similar here. They make the loan then sell it to someone else.

Re: Neiman Marcus files for bankruptcy

#125

Post by worik »

whatok wrote: post #63
rwmj wrote: post #33

Earlier quoted context omitted.

I assume someone must lend the money (as it's not created from nothing). How does it work?

Private equity firms raise funds (usually have a 10yr investment horizon) and use these funds to serve as the equity tranche for a buyout that the remainder is financed with debt. Banks (or other investment firms sometimes nowadays) will provide financing for these buyouts and that financing is later refinanced with syndicated financing through loans or bonds. There are a decent amount of banks that were in the middl…

So will we bail out the banks and their shareholders this time?

Re: Neiman Marcus files for bankruptcy

#126

Post by whatok »

takeda wrote: post #123
whatok wrote: post #88

Earlier quoted context omitted.

How does a PE firm make money if a shell company of theirs is losing money while another arm of it makes money? Also, if the only financing a business can access is basically consumer credit card rates, they probably weren't a going concern.

When I got a mortgage and refinanced. In both cases shortly after I got letter that my debt was purchased by someone else and from now on my payments supposed to go to a different company. I suspect it is similar here. They make the loan then sell it to someone else.

That's very different than the Enron-esque transaction described above. You are describing two separate companies. They're saying that some "shell company" takes a loss while the parent company makes all the profit.

Re: Neiman Marcus files for bankruptcy

#128

Post by dpeck »

andyv wrote: post #85

One of Frederick Wiseman's wonderful documentaries is "The Store", which is about Neiman Marcus sometime in the 80's. Currently streaming on Kanopy. One sequence showed the CEO giving a pep talk to his buyers, whose relationship with their suppliers was always strained at best. He told a joke about a buyer who called his supplier that went something like: Buyer: "Hello, is Fred Jones there?" Receptionist: "I'm sorry,…

That is so spot on. I've occasionally played the role of solutions engineer/sales engineer/whatever as part of two different companies selling consumer electronics products to big box stores and that is 100% right.

The supplier/buyer relationships are very "frenemy" even in the best of times.

Re: Neiman Marcus files for bankruptcy

#129

Post by hnmullany »

pjc50 wrote: post #19
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...

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.

That's not correct - creditors are usually banks for secured term debt or bondholders. The interest rates are not absurd. In this case, the bondholders are suing the private equity fund for stripping the asset. The bond in question looks like it had about a 10% interest rate

Re: Neiman Marcus files for bankruptcy

#130

Post by whatok »

worik wrote: post #125
whatok wrote: post #63

Earlier quoted context omitted.

Private equity firms raise funds (usually have a 10yr investment horizon) and use these funds to serve as the equity tranche for a buyout that the remainder is financed with debt. Banks (or other investment firms sometimes nowadays) will provide financing for these buyouts and that financing is later refinanced with syndicated financing through loans or bonds. There are a decent amount of banks that were in the middl…

So will we bail out the banks and their shareholders this time?

If this question is in reference to the hung loans I mentioned in my previous post, there won't be a need to; at least on those. This is small portion of overall bank business and banks are in much better shape than over a decade ago.
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