Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Neiman Marcus files for bankruptcy

reuters.com

Post reply on HN
Print view View original

201–210 of 276 posts

Re: Neiman Marcus files for bankruptcy

#201

Post by igravious »

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…

> Income for this group did not shrink, it just grew more slowly than other groups

Another way of saying that it grew more slowly than other groups is that it shrank.

Re: Neiman Marcus files for bankruptcy

#202

Post by lancesells »

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,…

Off topic but I wish I could pay for Kanopy as an individual. It was so great when my library supported it.

Re: Neiman Marcus files for bankruptcy

#203

Post by topkai22 »

pstuart wrote: post #187
topkai22 wrote: post #182

Earlier quoted context omitted.

I think the reason LBOs are so hated is difference in utility between the capitalists and the community. The capitalists (PE, management, and lenders) are putting a boatload of money at risk to make an even larger boatload of money, and are empowered to take that risk. If the bet doesn't work out? They'll lose money (but probably have lots left over) and maybe their jobs if goes bad. The community (workers, local sup…

> I think the reason LBOs are so hated It feels like economic strip mining to me. p.s. thank you for the clear explanations

It isn't always- there are certainly times where a PE company recognizes that a fundamental good company is doing stupid things with its assets. One of the reasons why LBOs and "corporate raiding" was such a cultural meme in the 80s is that there really were a ton of companies that weren't allocating capital well, and sometimes were run for management's benefit to the expense of the shareholders. A totally made up example might be a furniture manufacturer that also happened to own a some water parks and a bunch of real estate, because the CEO liked water parks. A corporate raider/PE firm might do the math and conclude the water park segment was dragging down the rest of company and the real estate would fetch a ton if the company actually sold it. So they take over the company with debt, pay off a chunk of the debt by spinning off the water park segment, sell off a bunch more real estate to people who want to use it, and then the core furniture manufacturer actually ends up with more free cash flow because they aren't supporting the dead weight businesses.

That's the idealistic case, and it does happen. But then there are the counter examples we all know...

Re: Neiman Marcus files for bankruptcy

#204

Post by jackcosgrove »

alexpetralia wrote: post #197
jackcosgrove wrote: post #165

Earlier quoted context omitted.

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.

No in fact it is precisely the opposite. As GDP growth declines, there is more accumulated investment savings (supply glut of capital) chasing fewer high-returning investments. The savings has to go somewhere, and often it goes into high-yield debt (exactly the type private equity issues). Low growth translates into the increased use of credit.

That would seem to increase risk of loss system-wide though.

I'm not arguing what you're saying is untrue as that appears to be what is happening. I'm arguing this behavior is irrational. If investment opportunities decline, investment should decline and sitting on savings should increase.

Re: Neiman Marcus files for bankruptcy

#205

Post by samatman »

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?

If you went to any of those places before the pandemic, you wouldn't have seen any empty storefronts.

Just because it squeezed Neiman Marcus, doesn't mean other stores could afford it.

Of course, everything has changed now. Will landlords have to lower their rents in response? Maybe.

Re: Neiman Marcus files for bankruptcy

#206

Post by apsec112 »

igravious wrote: post #201
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…

> Income for this group did not shrink, it just grew more slowly than other groups Another way of saying that it grew more slowly than other groups is that it shrank .

If your first child grows four inches and your second child grows six inches, you don't say that the first kid shrank.

Re: Neiman Marcus files for bankruptcy

#207

Post by 205guy »

reducesuffering wrote: post #174
gen220 wrote: post #93

Earlier quoted context omitted.

I grew up in the south bay, around the early-googler generation of nouveau-wealth. I assumed the kind of wealth signalling typical then was normal. In my experience, fancy clothes were very abnormal and got you the wrong kind of looks. People liked to live in very nice houses on expensive land, but flaunting your wealth beyond that (and maybe your fast car) was generally looked down upon. Porsches were seen as a mid-…

Also grew up in the Bay. The peninsula and the South Bay are the epicenter of the Facebook, Google, and Apple wealth. As these companies have flourished, the surrounding area has become extremely flush with wealth. It was only a matter of time before the materialism that has been seen in LA and NYC set in as the Bay is in its heyday. If you're looking for humility, you'll find it centered around UC Berkeley and Oakla…

I was going to say the "humility" went north to SF, that's when SOMA became big and SF went from a banking center with a hippy fringe to a software center with a hipster fringe. Through it all, the old money has lived on Nob hill and shopped at Union Square (the local Nieman Marcus), but look at the gentrification of everything else. The sense of style and fashion of the newly-rich in SF drove the hipster look, which had its own issues but least it was nominally independent and not all about buying flashy brands at stores.

I do love the Stanford campus and Palo Alto downtown, but I do think they were marred by the big money. For example, Stanford literally has a luxury fashion mall (probably with a Nieman Marcus store) on campus (and it probably is the most profitable part of the endowment). As for Sunnyvale-Santa Clara-San Jose, they just chose the suburban sprawl development when the money rolled in.

Re: Neiman Marcus files for bankruptcy

#208

Post by chiph »

vl wrote: post #146
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...

Middle class doesn’t shop at Neiman Marcus though.

I took a shortcut through my local Neiman Marcus last year (I wanted a Five-Guys burger), and looking at what they had for sale and their prices, I couldn't help but think "Even if you're super rich, you'd be nuts to shop here."

They had a black t-shirt with some rhinestones (presumably) on it for $5000. It was probably from some famous designer, but still .. $5000 for a t-shirt that had been gone over with a BeDazzler?

https://www.youtube.com/watch?v=9m766NNpwVg

Re: Neiman Marcus files for bankruptcy

#209

Post by pkaye »

whatok wrote: post #130
worik wrote: post #125

Earlier quoted context omitted.

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.

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?

Re: Neiman Marcus files for bankruptcy

#210

Post by stanfordkid »

economicslol wrote: post #196
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…

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.

Post reply on HN