The Neiman Marcus Group, which is just days away from emerging from Chapter 11 bankruptcy proceedings, has begun to “substantially” reduce its headcount.
Selling and non-selling associates at both the Neiman Marcus and Bergdorf Goodman stores are being let go. In addition, restaurant and bar staff at the stores will be pared down, though many of the food and beverage workers are expected to be rehired as the restaurants and bars reopen.
“This change is substantial and incredibly difficult, but we must ensure we have the right structure and right size team in place that matches our reduced financial forecast,” Geoffroy van Raemdonck, chief executive officer of the Neiman Marcus Group, wrote in a letter to vendors, a copy of which was obtained by WWD.
“We are continuing to evaluate every part of our business to ensure we are positioned for long-term success. Through our ongoing evaluation of the business, we have identified areas within our organization that need to be further streamlined,” van Raemdonck wrote.
He did not specify in his letter how many employees would lose their jobs. The company has about 12,000 employees.
He wrote that dining and beverage at NMG stores “have always been paramount to the overall customer experience. As the pandemic has continued though, our restaurants have remained closed or we’ve serviced customer requests through takeaway service. We’ve made the difficult decision to largely reduce our restaurant and bar staff across all of our stores. As we did with the reopening of our stores, we look forward to reopening our restaurants again, slowly and safely in phases. Over time, we’ll be able to rehire many of our talented food and beverage associates and add more staffing based on business needs.”
With store closings in the works and cuts being made in those stores that will continue to operate, it’s possible thousands of workers will be dismissed. It remains to be seen if the decision to streamline staff, while necessary to keep costs down in tough times and align them with sales levels, impacts service levels. At Neiman’s and Bergdorf’s, service has long been part of the culture and a differentiator, with many sales associates forming enduring relationships with customers.
A spokeswoman told WWD on Wednesday that the company will be rolling out new positions, including service ambassadors, digital client advisers and personal stylists “to better serve our customers at Neiman Marcus. This is reflective of our unique integrated retail experience as we continue our path to be the preeminent luxury customer platform.”
Van Raemdonck in his letter said the changes, which began Wednesday, will create a structure that “encourages teamwork, communication and a better end-to-end service for our customers. As we reorganize, we will separate from a number of selling and non-selling associates. While we are reducing headcount, we are transforming the functions of our store associates and focusing on best-in-class luxury client experiences.”
The changed organization could mean broader responsibilities for the remaining workers. In recent seasons, Neiman Marcus Group has focused on pumping up its e-commerce business, while targeting about ten stores for permanent closures, including the Neiman’s Manhattan flagship in Hudson Yards.
The pandemic has forced many retailers, particularly those selling fashion, to streamline staff in the field and at corporate headquarters. Last week, for example, Kohl’s Corp. cut 15 percent of its corporate workforce, realigning costs to the COVID-19 realities. Back in June, Macy’s said it was cutting about 3,900 corporate and management jobs and that staffing at stores, the supply chain and the customer support network would also be reduced.
Van Raemdonck said NMG is “strong coming out of Chapter 11 and although we will have to make some tough decisions along the way, our future looks bright.”
His “transformation” strategy is geared to modernize the Neiman Marcus Group into a “luxury customer platform” with new types of services and products — fashion and nonfashion — so that NMG would no longer be considered primarily a department store business with the Neiman’s chain and the two Bergdorf Goodman stores. 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 online and offline.
Earlier this month, a Texas bankruptcy court approved NMG’s restructuring plan that would convert some $4 billion in debt to equity, out of its $5.5 billion in debt, putting control of the company in the hands of its creditors and taking the ownership away from Ares Management and the Canada Pension Plan Investment Board. Ares and CPPIB took over the luxury retailer in a $6 billion leveraged buyout in 2013. Since then, Neiman’s had been burdened by the debt load, which cut into profitability and limited the retailer’s ability to invest back into the business. The pandemic and the debt forced NMG to file for bankruptcy in May.
Read more from WWD:
Neiman Marcus Set to Exit Bankruptcy
Neiman Marcus, Executive Bonuses, and Its Chapter 11 Journey
Neiman Marcus Weighs Future for Hudson Yards Flagship
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