Geoffroy van Raemdonck

Bankruptcy spells a new chapter for the Neiman Marcus Group, with $4 billion of its debt wiped out, different owners and a fresh financing package to keep operating.

But according to the luxury retailer’s chief executive officer Geoffroy van Raemdonck, there is much that will stay intact, at least in the weeks and months ahead.

In an interview on Thursday, just two hours after NMG filed for Chapter 11, van Raemdonck told WWD that the existing management will remain with the company through the bankruptcy proceedings expected to last into the fall, and that based on past conversations with creditors, who are now the owners, he’s confident they’re on board with sustaining the Neiman’s “transformation” strategy he’s been championing for two years.

Van Raemdonck also said the Neiman Marcus Group would not have filed for bankruptcy if the coronavirus pandemic had never happened, and that it had been generating enough cash to service the interest on the company’s debt. The debt is mostly gone now.

Asked how he felt now that Neiman’s bankruptcy finally happened, van Raemdonck replied: “There is so much on the upside here with two-thirds of the creditors willing to exchange their debt for ownership and investing in the company. This is very positive. The mood is positive. We have a very healthy business and we were on track to deliver more profit this year than last year and grow our gross margin and our top line.”

He said NMG generated $400 million in earnings before interest, taxes, depreciation and amortization in its last fiscal year, which ended Aug. 3, 2019, and had been on track to meet or exceed that amount in the current fiscal year until the coronavirus outbreak.

With any company that goes bankrupt, long-term prospects become questionable, as does the fate of existing management and its strategies, given the arrival of new owners and financial objectives. Neiman’s is the second major retailer to declare bankruptcy this week amid the pandemic, following Monday’s filing by the J. Crew Group. More are expected to follow.

Projecting an upbeat, optimistic outlook, van Raemdonck told WWD that creditors that have taken over Neiman’s in the debt-for-equity swap are supportive of the retailer’s “transformation” strategy, which put him and his team on a mission to modernize the business into a “luxury customer platform” with new types of services and products — fashion and nonfashion — that would no longer be considered primarily a department store business. The strategy also seeks to sharpen the focus on full-price selling and personalization and has been providing sales associates with technology tools so they can sell better on and off-line.

“I would say the filing doesn’t change the way we operate. The pandemic has changed the way we operate,” van Raemdonck said, emphasizing that Neiman’s has been decisive in managing costs and inventory through the health crisis by furloughing many workers, temporarily closing all stores, and having executives take salary cuts.

To some extent, the pandemic has accelerated NMG’s transformation efforts, which in large part center on bolstering the already-sizable digital business. It represents more than one-third of NMG’s $4 billion in revenues. In March, 4,500 associates were equipped with NM Connect and BG Connect technology, providing them with data and information on products and customers and ways to communicate with them via e-mail, exchanging photos, and other means. It’s particularly useful at a time when no Neiman’s stores are open to shoppers due to COVID-19. “Over the past five weeks, our sales associates generated $60 million in digital revenues. That’s truly being digital,” van Raemdonck said.

Other retailers such as J.C. Penney Co. Inc. and the Ascena Retail Group are seen as bankruptcy candidates, while Lord & Taylor is expected to liquidate its stores. In the case of Neiman Marcus, van Raemdonck took the position that the worst is behind it. “We have ample liquidity to deal with this health crisis,” he said. The company will emerge from the bankruptcy highly deleveraged compared to other retailers, several of which have been putting extending debt and borrowing on revolving credit lines to stay afloat during the health crisis. With the bankruptcy, Neiman’s brings its debt down from more than $4 billion to $750 million. “By eliminating 80 percent of debt we will be extremely strong financially,” said the ceo.

The Neiman Marcus Group had been owned by Ares Management LLC and the Canada Pension Plan Investment Board, which together bought the business for $6 billion in 2013. With the bankruptcy, the major creditors — TPG Capital, Pimco and Davidson Kempner Capital Management — are the new owners.

Asked if executive changes are foreseen, van Raemdonck said current management will stay through the filing. Beyond that, “We are not speculating.” It would take some time to find and install new leadership.

Talk that Neiman’s would go bankrupt has been around since well before the coronavirus outbreak, making vendors and suppliers jittery. In several cases, they are owed millions of dollars and will not be paid for past orders.

Asked if there is a plan to communicate with designers and brands to encourage their support going forward, van Raemdonck said, “What is very important is that the brands know we have a business that is profitable, and that we will continue to have relationships that are healthy and profitable on both fronts and that now we are going through financial restructuring that gives them protection. We will be spending a lot of time making sure they understand this strengthens our relationship with them and our ability to partner with them.”

Asked if Neiman’s would have gone bankrupt if there was no pandemic, van Raemdonck replied, “This company was on its way to continue to grow profitably. It was really the pandemic that totally changed the outcome. It was really the pandemic and the unprecedented pressure that it has put on everyone that precipitated the bankruptcy. It made it impossible to fund our operations and pay for the debt.”

In Texas, historically a stronghold for the Dallas-based Neiman’s, the governor has given the green light for nonessential retailers to open their stores. Neiman Marcus has yet to open any of its seven Texas stores though they are providing curbside pickup of online orders. Also, the NorthPark Mall store in Dallas, as well as the Atlanta store, are providing by-appointment in-store shopping. Neiman’s also has curbside pickup at its Las Vegas and Atlanta stores.

See Also: What to Know About Neiman Marcus’ Bankruptcy

Neiman’s new financing could expedite some doors opening for shopping. “We are very much assessing the next wave of store openings,” van Raemdonck said. “It is really important do it in a way to make the customer feel safe and make it magical. Some store openings are under consideration, a handful. The key for us is to figure out when the customer is ready to come to our stores. Any store reopening won’t be driven by financial considerations.”

Likely, store closings will happen soon, though not many. Bankruptcies enable retailers to get out of leases with little or no penalty. Sources characterize the St. Louis; downtown Dallas; and Natick, Mass., units as among the weaker locations. There has also been speculation over the performance of the flagship in Hudson Yards though Neiman’s is said to have received a break on the rent there. Top doors are said to be Bergdorf Goodman, Beverly Hills; NorthPark; Houston; Chicago; San Francisco; Short Hills, N.J., and Bal Harbour, Fla.

Neiman’s has already been streamlining by closing most of the 22 Last Call clearance outlets and cutting hundreds of jobs. The company has 13,700 corporate and store associates and operates 43 Neiman’s stores, two Bergdorf Goodman stores,,, the Mytheresa luxury web site, the Horchow direct-to-consumer business and Last Call outlets.

With most of its debt wiped out, Neiman’s should have the wherewithal to renovate stores and provide new experiences, at least when the pandemic subsides and business returns to some degree of normalcy. The huge debt stymied investments needed to keep the luxury retailer competitive and on pace with shifting consumer shopping patterns, and cost the business its reputation as the nation’s leading luxury chain.

“We are pursuing a transformation and will have the means to invest in the business. The reduction of the debt allows us much financial flexibility, but it’s too early to say what we do with it,” van Raemdonck said.

Read more from WWD:

Retail Job Losses Hit 2.1 Million for April

Calif. Gives Retailers New Guidelines To Start Reopening

How Retailers Are Reshaping Fall 2020 Buys

WATCH: Get an Inside Look at How PPE Is Made