Neiman Marcus Chief Executive Sees Stores As Vital for Digital Growth

The Business of Fashion Podcast

The Business of Fashion

Fashion & Beauty, Business, Arts

4.6 • 770 Ratings

🗓️ 16 July 2020

⏱️ 59 minutes

🔗️ Recording | iTunes | RSS

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Summary

In an exclusive conversation with BoF’s Imran Amed, Geoffroy van Raemdonck expresses optimism for the retailer’s bankruptcy process and explains why brick-and-mortar remains integral to its core business.

LONDON, United Kingdom — When facing both a nation-wide retail shutdown and a Chapter 11 bankruptcy protection filing, Neiman Marcus Group Chief Executive Geoffroy van Raemdonck found solace in one fact: his most loyal customers, even at stores that have yet to re-open to the public, are shopping more than they did last year.

“Neiman Marcus is a relationships business,” Van Raemdonck told BoF Editor-in-Chief Imran Amed in an exclusive interview this week.

Despite the global health crisis — and a dire debt problem that loomed even pre-pandemic — Van Raemdonck sees an opportunity for growth.

As consumers continue to migrate online, Neiman Marcus’ 43 stores remain integral to forging lasting connections between shoppers and sales associates. Prior to the coronavirus, every Neiman Marcus store that was open for more than a year was profitable. That’s why the retailer is planning on closing fewer than 10 stores, Van Raemdonck said.
Neiman Marcus’ primary problem is debt. In 2019, the company generated $415 million in adjusted EBITDA, which represented 9 percent of its sales. The issue is that $365 million of that profit had to go toward paying down its debt. In the bankruptcy process, Neiman Marcus has been able to convince more than 75 percent of its debtholders to exchange what they are owed for equity in the company.
The retailer's objective now is to maximise its existing relationships with customers and meeting them where they are. To do so, it recently unveiled a new clienteling app called Neiman Marcus Connect. The app allows sales associates to connect with their individual customers wherever and however they like to shop.

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Transcript

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0:00.0	Neiman Marcus is a relationship business.
0:05.0	It was built as a relationship business with the most loyal and affluent luxury customers, and it still is.
0:12.0	People were speculating about a Neiman Marcus bankruptcy long before the coronavirus pandemic actually happened. There was no sign for us of a bankruptcy in the short term because the business itself didn't have a problem.
0:28.6	The debt that one carries and that we carry is a heavy burden.
0:32.6	In 2020 fiscal, which ends at the end of this month, we were on track to generate more profit
0:39.0	and to exceed our plan.
0:41.0	But the challenge you have is really when you have to pay $365 million out of the $415 to service
0:48.6	the debt, you do find yourself in situations where you can't invest to what the business warrants.
0:58.7	Hi, this is Imran Ahmed founder and CEO of the Business of Fashion and welcome to the Bof
1:03.8	podcast. This week on Bof Live, I sat down with Neiman Marcus CEO, Geoffroix van Remdonk,
1:10.1	who has had the interesting challenge
1:12.4	of managing not only one of America's largest department stores through the coronavirus pandemic,
1:19.0	but also has had to navigate through bankruptcy proceedings under the Chapter 11 process in the U.S.
1:25.4	I spoke to Jauffois about how the company is managing through this, what Neiman Marcus
1:29.9	is likely to look like after the bankruptcy process is over, and his new approach to engaging
1:37.7	with customers using what he calls a third channel for retail.
1:41.7	Here's Jauffo Van Rhendonk inside fashion.
1:51.2	Today I'm thrilled to have with me the CEO of Neiman Marcus,
1:55.8	Jafeuwa van Remdanc, who has joined the retailer a couple of years ago at a very interesting time. And over the last
2:06.1	few months, has been navigating both the coronavirus pandemic and Chapter 11 bankruptcy. And I think,
2:15.3	you know, based on a conversation that Jeffa and I had about 10 days ago,
2:20.3	there's a lot of learnings and insights that come from having to operate a business with both of those things going on.
	...

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