Neiman Marcus hires reorg firm before reporting "earnings"

The US retail woes continue as news from the Fed said the consumer kept their credit cards in their wallets in January.

Neiman Marcus, the Dallas-based high-end outlet has hired Lazard, an investment banking firm, to help it restructure its $4.8 billion in debt.

This news comes as the Federal Reserve said consumers’ credit card debt in January had the smallest increase in borrowing in more than four years.

New credit card debt rose $8.8 billion in January compared to an increase of $14.8 billion in December, the Fed report said Tuesday. It was the smallest monthly gain since borrowing only went up $7.6 billion in July 2012.

For Neiman Marcus the sales crunch and looming debt loads comes as the retailer in scheduled to report earnings next week. In the last quarter this is the CEO Karen Katz said weakness in the oil patch had a negative impact on shoppers.

While the reorganization announcement did not say bankruptcy was imminent, Neiman’s unsecured bonds were trading near 50 cents on the dollar.

Neiman joins a growing list of retailers seeking debt protection and announcing store closures this year.

These large retailers are amongst the stores announcing 1,500 store closings in the first two months of 2017, including:

  • JC Penney – 140 stores
  • Sears – 150 stores
  • Macy’s – 68 stores
  • HHGregg – 88 stores
  • The Limited – 250 stores
  • Abercrombie & Fitch – 60 stores
  • Wet Seal – 171 stores
  • CVS – 70 stores

Lastly, despite news accounts to the contrary, Macy’s is looking into becoming a  REIT or a mini-mall inside many of its stores. The mall operators are also having plenty of trouble as they struggle to keep their outlets from going dark due to vacant store fronts.

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