Neiman Marcus files for bankruptcy • Hacker News Board

Re: Neiman Marcus files for bankruptcy

#161

Post by nogabebop23 » Thu, May 07, 2020, 8:59 PM UTC

kshacker wrote: post #89

devchix wrote: post #79

Earlier quoted context omitted.

Thanks for that. But why is the company now worse off than before? A company can be funded with equity or debt (different terms and obligations, I understand) but if a company converts 100% of its outstanding shares to debt, why does anything change? I assume this is what happens when a company takes itself private to escape the grind of quarterly earning, short-term growth, tyranny of Wall Street analysts, etc. If I…

Your theory is good, but is it what happens in practice? In the headlines, you will find examples of "corporate raiders" who bought the company to "extract value" which means doing pretty much what a leech does. Also most of these examples showcase that the company would have been better off without the private equity buyers. Could there be good buyers, sure.

it get's worse: often the same PE that's doing the leveraged buy-out is also financing it, at preferential terms and itnerest rates. see: Sears.

Re: Neiman Marcus files for bankruptcy

#162

Post by vl » Thu, May 07, 2020, 9:00 PM UTC

greedo wrote: post #68

ghaff wrote: post #9

Earlier quoted context omitted.

Yeah. It's not just department stores--which I have less direct experience with. A lot of the old line "mail order" outfits like LL Bean, J Crew, Lands' End, etc. (as well as many of the at least semi-premium outdoor clothing/gear/etc. brands) are much more of a both quality and customer service crapshoot than they once were. At the risk of painting with an overly broad brush, when everything is made in the same, mos…

I used to be an Eddie Bauer guy. Shirts, shoes, shorts, jeans, coats, you name it. Spent a good chunk of change at their mall store where you could try stuff on. Overtime, the fabrics got thinner on shirts and jeans. They stopped stocking my size in store. Stuff started wearing out quicker. I tried to order online, but the order fulfillment was hit and miss. Too bad for them...

I still mostly buy clothes at Eddie Bauer online - while there is a hit and miss occasionally, they have mostly consistent quality and sizing, and it’s easy to pass on inferior items by reading reviews. Easy return policy also makes it risk-free. They also have constant sales.

Re: Neiman Marcus files for bankruptcy

#163

Post by paganel » Thu, May 07, 2020, 9:02 PM UTC

hnmullany wrote: post #129

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.

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

To be fair a 10% interest rate for debt sold in the last 2-3 years was kind of absurd, even for many junk bonds (of course I'm talking about the pre-virus situation).

Re: Neiman Marcus files for bankruptcy

#164

Post by kinkrtyavimoodh » Thu, May 07, 2020, 9:04 PM UTC

fakedang wrote: post #139

1-6 wrote: post #81

The definition of luxury has changed. It's now more about value, utility, and stability. Luxury means owning property in a high-end location, a MacBook Pro, fast optical networks, clean drinking water, and a reliable car.

MacBook Pros are luxury goods now? What someone, such as myself, doesn't really like them, and instead prefers Thinkpads, like most of my peers?

What you like has little to do with luxury, and in many cases is actually anti-parallel to luxury.

I like my comfortable cotton tank top and my mom's mac and cheese but neither of them are luxury goods.

In fact since a lot of luxury is actually about signaling, if it's too comfortable / has high utility, it might actually lose status.

Re: Neiman Marcus files for bankruptcy

#165

Post by jackcosgrove » Thu, May 07, 2020, 9:05 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…

As long term GDP growth rates decline due to demographics, an economy becomes less able to service debt. In order to keep systemic risk constant, use of leverage should decrease, not increase. Something doesn't add up.

Re: Neiman Marcus files for bankruptcy

#166

Post by Allower » Thu, May 07, 2020, 9:07 PM UTC

devchix wrote: post #96

kshacker wrote: post #89

Earlier quoted context omitted.

Your theory is good, but is it what happens in practice? In the headlines, you will find examples of "corporate raiders" who bought the company to "extract value" which means doing pretty much what a leech does. Also most of these examples showcase that the company would have been better off without the private equity buyers. Could there be good buyers, sure.

"extract value" -- what does this mean? Sell off the furniture? Fire 50% of the employees? I have image of Richard Gere saying "I buy companies that are in financial difficulties, I break it up into pieces, and I sell that off." Like stealing cars and selling them for parts, right?

So kind of like white blood cells destroying a cell that has become cancerous or diseased in order to protect the organism overall, I see.

Re: Neiman Marcus files for bankruptcy

#167

Post by freepor » Thu, May 07, 2020, 9:09 PM UTC

apsec112 wrote: post #158

lkrubner wrote: post #127

Everyone talks about the "Amazon effect" but the changing distribution of income is also worth considering: " Retail is suffering because the middle classes have lost $1,355 trillion in income since 1970 " http://www.smashcompany.com/business/retail-is-suffering-bec...

That is quite the abuse of statistics! US GDP (edit: inflation-adjusted) was $5 trillion in 1970, and $19 trillion in 2019. The income percentage of the middle three quintiles went down from 53% to 45%, but 45% of $19 trillion is still much, much more than 53% of $5 trillion. Income for this group did not shrink, it just grew more slowly than other groups. The income was "lost" relative to a hypothetical world in whi…

Please familiarize yourself with the terms “per capita” and “inflation.”

Re: Neiman Marcus files for bankruptcy

#168

Post by AnimalMuppet » Thu, May 07, 2020, 9:09 PM UTC

trey-jones wrote: post #147

vl wrote: post #146

Earlier quoted context omitted.

Middle class doesn’t shop at Neiman Marcus though.

I think the suggestion here is that they used to, until the American Middle Class was forcibly merged into the American Lower Middle Class.

But they still didn't. I went into Neiman Marcus in Dallas in 1991, just to look around. I found a leather jacket, with red... I'm not even sure what to call it. Paint? It was a layer on top of the leather, not dye. It looked very tacky. And it was $1000. In 1991. Well, even in 1991, the middle class had a lot less expensive places to buy tacky-looking junk.

Re: Neiman Marcus files for bankruptcy

#169

Post by freepor » Thu, May 07, 2020, 9:10 PM UTC

trey-jones wrote: post #147

vl wrote: post #146

Earlier quoted context omitted.

Middle class doesn’t shop at Neiman Marcus though.

I think the suggestion here is that they used to, until the American Middle Class was forcibly merged into the American Lower Middle Class.

No, Neiman Marcus has always been an upper crust store with extravagant Christmas catalogs.

Re: Neiman Marcus files for bankruptcy

#170

Post by apsec112 » Thu, May 07, 2020, 9:12 PM UTC

freepor wrote: post #167

apsec112 wrote: post #158

Earlier quoted context omitted.

That is quite the abuse of statistics! US GDP (edit: inflation-adjusted) was $5 trillion in 1970, and $19 trillion in 2019. The income percentage of the middle three quintiles went down from 53% to 45%, but 45% of $19 trillion is still much, much more than 53% of $5 trillion. Income for this group did not shrink, it just grew more slowly than other groups. The income was "lost" relative to a hypothetical world in whi…

Please familiarize yourself with the terms “per capita” and “inflation.”

The numbers I used were inflation-adjusted. I gave total income because that's what the parent comment referenced, but per capita income has grown too, although not as much (US population is up 60%, compared to total income growth for this group of 223%). Also, "please familiarize yourself" is a slightly rude way of putting it.