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Neiman Marcus Group said on Tuesday it would lay off about 5% of its workforce, or around 500 employees, as the luxury department store chain looks to cut costs in a tough economy.
The Dallas-based luxury icon, which also owns Bergdorf Goodman, is preparing to distribute pink slips this week to nearly 500 of Neiman’s employees across the entire organization including merchandising, supply chain, technology and retail — and severance packages are expected to be skimpy, sources told The Post.
The company joins a growing list of firms in corporate America – from Wall Street banks and tech companies to online furniture retailer Wayfair Inc – that have reduced their workforce amid worries of an economic downturn.
The company also said its Chief Product & Technology Officer Bob Kupbens will depart, while said Ryan Ross, president, Neiman Marcus, will lead customer insights for the group.
Darcy Penick, the president of luxury department store Bergdorf Goodman, will assume group-level leadership of the NMG Product & Technology organization.
Neiman Marcus Group has more than 10,000 employees as per its website.
job cuts are “due to our failure to hit the sales plan we submitted,” one insider said. “Business is soft, not so terrible, but behind the growth we projected.”
The source predicted that Neiman will describe the layoffs as “the next step in our journey,” but added that “this is really a result of poor financial planning and an unwillingness to budge from that error.”
After The Post contacted Neiman about the cuts early Tuesday afternoon, the company released a statement confirming the bloodbath, saying “certain positions representing less than 5% of the workforce will be eliminated across the organization.”
The looming carnage is a far cry from the previous two years, when Chief Executive Geoffroy van Raemdonck distributed fat bonuses to himself and other brass after the company emerged from bankruptcy in September 2020. The payouts — which van Raemdonck boasted were the biggest at Neiman in at least 30 years — were doled out in October, following a similar bonanza in 2021, insiders told The Post.
Van Raemdonck had previously come under fire as he reaped about $10 million in bonuses for himself during the height of the pandemic, as well as perks including an unusually generous health benefit plan. The payouts came even as employees faced pay cuts and layoffs, as The Post exclusively reported. Neiman Marcus Group employs about 10,000 workers.
“How could the last two years be a max bonus payout?,” one executive who received a fat bonus wrote last year on EthicsPoint, a private platform employers provide for employees to air grievances anonymously. “Were they purposefully set to be easy to accomplish?” according to the report, which was viewed by The Post.
When setting bonus benchmarks, experts say it’s not unusual for a company to set less aggressive hurdles on the heels of a bankruptcy filing. But “two years in a row of max bonus means the company should be growing in leaps and bounds,” said a compensation expert familiar with Neiman Marcus who asked not to be identified.
With its well-heeled clientele spending freely amid a post-pandemic luxury boom, the past two years’ bonuses ranged from thousands for salaried employees to millions for some C-suite executives, according to sources close to the company.
“We are building a business to move forward, but paying like we are on top of the world. But we’re not,” the employee added on EthicsPoint, saying he or she planned to donate 15% of the bonus to charity. “I feel the amount of money we were all given was too much for the year.”
Neiman Marcus reassured the employee, according to the EthicsPoint report, that the company’s financial projections for bonuses are set by the board of directors and an independent compensation consultant.
Executives at the vice president level will be offered severance packages of approximately six months but if they land another job before then they are not entitled to future payments, sources tell The Post. One employee called the severance conditions “harsh.”
“There is language in the agreements that if they fail to notify Neiman Marcus [of their new job] the company has the right to come after them for the payment,” a person with knowledge of the agreement said.
Such clawbacks are unusual in retail layoffs and most other industries, a compensation expert told The Post. “It’s usually used in the sports world when million of dollars are in play and there’s been a signed contract but the person has been terminated.”
Neiman Marcus’ fortunes are largely tied to the big oil companies, which have raked in massive profits this year – seven of Neiman Marcus’ 36 stores are in Texas – and to a small group of loyal, millionaire customers. For much of the pandemic, these customers were impervious to job layoffs and financial hardships. But in recent months, even the super wealthy are pulling back amidst economic uncertainty.
In January, reports emerged that Saks.com would be laying off about 100 employees, largely in its technology division, or about 3.5% of its workforce.
In October, van Raemdonck boasted of the company’s “strong performance” in 2022. Neiman Marcus generated 30% growth in comparable sales for the fiscal year ended in July, he said.
Last year, Farfetch Ltd, an online retailer of luxury fashion products, had said it would make an investment of up to $200 million in Neiman, gaining a stronger foothold in the United States as part of a deal to develop the high-end department store’s online business.