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Neiman Marcus files for bankruptcy

reuters.com

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Re: Neiman Marcus files for bankruptcy

#221

Post by chillacy »

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.

If this was a west coast city, I'm sure they knew one of their target customers very well... they might even have Mandarin speaking staff.

Re: Neiman Marcus files for bankruptcy

#222

Post by johnvanommen »

stainforth wrote: post #200
nutshell89 wrote: post #159

Earlier quoted context omitted.

Neiman Marcus suffers from two additional factors imo - a lot of their retail is in pricy urban real estate markets (Beverly Hills, Palo Alto, Stockton Street, Michigan Ave, Hudson Yards, Tysons, Houston's Galleria, etc.) where rents have escalated in recent years in comparison to cheap Amazon / Walmart style giant warehouses outside of town. Additionally, NM has been owned by PE for years putting financial strain on…

Why don't those landlords just lower their rents to meet demand then?

> Why don't those landlords just lower their rents to meet demand then?

Keep in mind how the concept of an "anchor tenant" works.

For instance, Sears had leases that were as long as 99 years long, with rates that were as low as one dollar per year. (No joke: https://www.denverpost.com/2019/09/26/kmart-monaco-evans-den...)

The way that the retail model was structured, back in the 70s and the 80s, was that the anchor would bring buyers into the area, and the landlord would make the lion's share of their income off of the stores around it, such as restaurants, jewelry stores, movie theaters, etc.

If all that makes sense, you can see that a lot of these landlords would actually be thrilled to see these department stores go away, because then they could re-purpose the space into something that generates more money.

Fry's Electronics, Sears, Macy's... they're all an example of this.

Re: Neiman Marcus files for bankruptcy

#223

Post by chillacy »

lazerpants wrote: post #181
asdff wrote: post #116

Earlier quoted context omitted.

It's on the upswing among the youth. I'm seeing a lot more plain black hoodies with BALENCIAGA screen printed across the front. Gucci and versace have seen a resurgence, even their rubber slides which are probably less comfortable than a $15 pair are coveted and featured in music videos. Dressing nicely to some might mean a gaudy branded t shirt under a blazer, percieved by the wearer as passable for nice attire due…

To be fair, the materials and labor used by high end brands (at least the ones you mentioned) are different from cheap brands. Most of the labor is Italian or Portuguese, and those workers get a paid month off every year in addition to benefits, even if they aren't highly paid. Likewise, the materials they use are generally higher quality and are sourced more carefully. High end brands also do a shitload of QC. I'm n…

Even that depends now. For awhile there was a strategy for diffusion lines where brands would sell cheaper goods under a slightly different label. Think Burberry Brit, Versace Collection, or Polo Ralph Lauren.

Nowadays the trend is to put everything under the mainline brand, which I find kind of deceptive. You really have to check garment quality and price for everything.

Re: Neiman Marcus files for bankruptcy

#224

Post by owenmarshall »

stanfordkid wrote: post #210
economicslol wrote: post #196

Earlier quoted context omitted.

Speaking of abuse of statistics, lumping the bottom 20-40% with the top 60-80% of wage earners is extremely deceptive. It's well known that income growth is wildly different for those groups. Inflation adjusted wages for the median worker only increased by 9% from 1973 to 2014.

True. But how much did the productive output of the average American increase? Can we really expect things to "always increase" -- including wages? To me this seems like an absurd idea. The end goal should be improving the median quality of life, through improving the efficiency of factors of production -- lower cost of goods... not through the expectation that the wages should arbitrarily grow linearly with GDP.

> But how much did the productive output of the average American increase?

Around one hundred percent. https://data.oecd.org/lprdty/gdp-per-hour-worked.htm

Re: Neiman Marcus files for bankruptcy

#225

Post by chillacy »

paganel wrote: post #173
chadash wrote: post #18

Earlier quoted context omitted.

Do the numbers reflect this? I'm just looking at the stock prices of a few luxury companies like LVMH and and Kering and it seems they were are at all time highs prior to COVID.

It might be because of China and the Chinese market/customers. It's only anecdotal, but last October I got to visit Vienna for one day (I live in Europe) and I was surprised to see a a lengthy queue outside the Louis Vuitton store close to the St. Stephen's Cathedral. First, I was surprised because I couldn't understand why would anyone still wait in that sort of queue for something to purchase in this day and age (w…

These people are probably wealthy enough not to care but if I were buying a $5000 purse I'd want to do it in person, like I'd test drive a car before I bought it.

Also if I were traveling on vacation, ordering online and shipping to my hotel would not be my first choice.

Re: Neiman Marcus files for bankruptcy

#226

Post by johnvanommen »

pkaye wrote: post #209
whatok wrote: post #130

Earlier quoted context omitted.

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.

So who actually loses money in the end? Edit: Or is this one of the outliers and most of the other times all the participants make money?

Pension funds will be getting beat up by a lot of these.

For instance, 24 hour fitness is on the verge of failing, and it's owned by a pension fund in Canada.

https://www.24hourfitness.com/company/press_room/press_relea...

"24 Hour Fitness USA, Inc. announced that AEA Investors, a leader in the private equity industry; Ontario Teachers’ Pension Plan, Canada's largest single-profession pension plan – and one of the world’s largest; and Fitness Capital Partners, a fund organized by Dean Bradley Osborne and Global Leisure Partners have completed their acquisition of the Company from Forstmann Little & Co."

Re: Neiman Marcus files for bankruptcy

#227

Post by noitsnot »

ashtonkem wrote: post #190
twblalock wrote: post #144

Earlier quoted context omitted.

I don't buy that explanation. A lot of traditional mall and department store retail is suffering, but other kinds of retail is doing great selling to middle-class Americans. Examples include Home Depot, Lowes, Walmart, Target, and Amazon. They are winning because they offer more convenience to customers as a result of their size, selection, and online presence. Besides, this article is about a luxury retailer, not th…

Also changing tastes in clothing have reduced the gap between luxury clothing and cheap clothing by a lot, while home improvement needs remain more or less steady.

Cheap clothing has been taken to a whole new level where the quality at some of the mall stores is really terrible and the prices aren't realistic in comparison.

Re: Neiman Marcus files for bankruptcy

#228

Post by johnvanommen »

gamblor956 wrote: post #194
formercoder wrote: post #151

Earlier quoted context omitted.

The web of incentives behind LBOs is very complex. They happen because in reality a lot of the time many of the people involved make money. This is availability bias. You only hear about the explosions. You don't hear about the thousands of LBOs that happen which never blow up.

The financial structure of a LBO is that a PE fund uses the assets of an acquired company to pay for the acqusition. They generally put little if any of their own money down other than as earnest capital. They then take out additional loans using the acquired company assets as collateral and pay themselves distributions out of those loans. The acquired company is left to repay the massive and increasing debts. You do…

There's a great CNBC show called "The Profit" which really makes it easy for a layman to understand how private equity works. On the show, it's interesting to see how the investor who is putting up his money is often uninterested in investing in a company that's growing quickly and making good profit margins.

I can only speculate on what the investor's true motivations is. But there was one episode in particular which was interesting:

1) The investor came in, offered up a few hundred thousand dollars for a 51% stake

2) He immediately had the company upgrade their equipment, purchasing new equipment

3) Eighteen months later, the company was bankrupt

When all the dust settled, the company was re-packaged and sold to another company, the original owners were gone, and the manufacturing was sent overseas.

When the investor was having them buy a bunch of equipment, I was definitely wonder if his prime motivation was to simply have some tangible assets that he could recover once the inevitable bankruptcy occurred.

Re: Neiman Marcus files for bankruptcy

#229

Post by chillacy »

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.

$700 sneakers, probably marked up too much for the brand, but $300 sneakers are reasonable if you want minimally branded leather sneakers with high quality construction. If you don't care for that kind of stuff though then that's cool, but that's personal preference.

Re: Neiman Marcus files for bankruptcy

#230

Post by chillacy »

rb808 wrote: post #186

People dress very cheaply now. I'm always amazed from historic photos, it seems the further back you go the more money they spent on appearance. These days it just looks like no one cares. I'm surprised upmarket stores lasted this long.

Also depends where you live. Seattle is very different than NYC or Paris.
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