CEO Neiman Marcus to cut nearly 5% of workforce after receiving hefty bonuses

Neiman Marcus is poised to lay off nearly 5% of its workforce as the posh retailer braces for a downturn – despite the company handing out record cash bonuses over the past two years, The Post has learned.

The Dallas-based luxury icon, which also owns Bergdorf Goodman, is preparing to hand out layoff notices this week to nearly 500 Neiman employees across the organization, including merchandising, supply chain, technology and retail, and severance pay is expected to be meager. sources told The Post.

The job cuts were “due to the fact that we were unable to meet the sales plan we presented,” one insider said. “Business is soft, not as terrible, but beyond our projected growth.”

The source predicted Neumann would call the layoffs “the next step in our journey,” but added that “it’s actually the result of poor financial planning and an unwillingness to budge because of this mistake.”

After Neiman was contacted by The Post about the cuts on 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 very different from the previous two years, when CEO Geoffroy van Raemdonk handed out hefty bonuses to himself and other executives after the company emerged from bankruptcy in September 2020. The payouts van Raemdonk boasted about were Neiman’s biggest in at least 30 years – issued in October after a similar boom in 2021, insiders told The Post.

Van Remdonk has previously come under fire as he received about $10 million in bonuses for himself at 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, The Post reported exclusively. The Neiman Marcus Group employs approximately 10,000 people.

“How can the last two years be the maximum bonus?” one executive who received a hefty bonus wrote last year on EthicsPoint, a private platform that employers provide to employees for anonymous reporting of complaints. “Were they deliberately set up to be easy to complete?” According to a report reviewed by The Post.

When setting bonus benchmarks, experts say it’s not uncommon for a company to set less aggressive barriers immediately after filing for bankruptcy. But “a maximum bonus two years in a row means the company should grow by leaps and bounds,” said a compensation expert familiar with Neyman Marcus, who asked not to be named.

Its affluent clientele is spending freely amid the post-pandemic luxury boom, according to sources close to the company, and bonuses over the past two years have ranged from thousands for salaried employees to millions for some senior executives.

“We build a business to move forward, but we pay like we’re on top of the world. But that’s not the case,” added an employee at EthicsPoint, saying he plans to donate the 15% bonus to charity. “I feel like the amount of money we were all given was too much for this year.”

According to an EthicsPoint report, Neiman Marcus assured the employee that the company’s financial projections for bonuses are being set by the board of directors and an independent compensation consultant.

Executives at the vice-presidential level will be offered approximately six months’ severance pay, but if they get another job earlier, they will not be eligible for future payments, sources tell The Post. One employee called the conditions of dismissal “harsh”.

“There is a wording in the agreements that if they do not notify Neiman Marcus [of their new job] the company has the right to demand payment from them,” said a person familiar with the agreement.

Such refunds are unusual for layoffs in retail and most other industries, a compensation expert told The Post. “This is commonly used in the sports world when there are millions of dollars in the game and a contract has been signed but the person has been fired.”

Neiman Marcus’ fortune is largely tied to the big oil companies, which have made huge profits this year – seven of Neiman Marcus’ 36 stores are in Texas – and a small group of millionaire loyal customers. For much of the pandemic, these clients have been immune to layoffs and financial hardship. But in recent months, even the super-rich have been pulling back amid economic uncertainty.

Reports surfaced in January that Saks.com would lay off about 100 employees, mostly in its technology division, or about 3.5% of its workforce.

In October, van Raemdonk boasted of the company’s “strong results” in 2022. Neiman Marcus posted a 30 percent increase in like-for-like sales in the fiscal year ending July, he said.

Industry watchers believe Neiman, owned by private equity firms, is laying the groundwork for going public again. In the fall, van Remdonk spoke at the Goldman Sachs Retail Conference in Manhattan and at the Piper Sandler Technology and Consumer Conference in Nashville.

“Talking to Wall Street helps build credibility, and I believe he builds credibility for a possible deal,” said Gary Wassner, chief executive of Hilldun Corp., a fashion industry lender.