Farfetch To Invest Up To $200 Million In Neiman Marcus Group As Legacy Retailer Replatforms Bergdorf Goodman Unit

Neiman Marcus Group CEO Geoffroy van Raemdonck and Farfetch CEO and founder José Neves on Tuesday announced that Farfetch will invest up to $200 million in a strategic partnership with Neiman Marcus Group, as it replatforms its Bergdorf Goodman business and expands it internationally.

Bergdorf Goodman has always been a single-unit specialty store with men’s and women’s stores across the street from one another on New York’s Fifth Avenue, between East 57th Street and East 58th Streets. Neiman Marcus Group, which has owned Bergdorf’s since 1987, has tried for years to find a way to expand the business, without sacrificing its specialness, and has long resisted opening new stores for the nameplate.

Neiman Marcus Group in May of 2020 filed for Chapter 11 bankruptcy protection due to the impact of the Covid-19 pandemic, and buckling under the weight of a staggering $5 billion in debt. Bergdorf Goodman launched the careers of many designers, including Michael Kors, who kicked off his first eponymous collection at the store in 1981.

“Farfetch believes in creating value,” van Raemdonck said in an interview, referring to the luxury e-commerce platform, which went public in 2018 after listing on the New York Stock Exchange. “We have a lot of available liquidity to go more on the offensive. Farfetch is going to go into technology innovation and go international. That money is there to fuel the expansion.”

“One of the reasons we’re excited is we built this [Bergdorf Goodman] with a global reach in mind, rather than that being an afterthought,” said Darcy Penick, president of Bergdorf Goodman. “We’re going to replatform Bergdorf Goodman’s web site and mobile app using Farfetch Platform Solutions to expand its global capabilities and services.”

Farfetch said Tuesday it will make a minority common equity investment of up to $200 million in Neiman Marcus Group, joining existing investors including PIMCO, Davidson Kempner Capital Management, and Sixth Street. Neiman Marcus Group will use the proceeds to further accelerate growth and innovation through investments in technology and digital capabilities.

The investment will allow Neiman Marcus Group to make market selections for Bergdorf Goodman, with translations in language, local call centers and local currency payments, which will allow it to dig even deeper into understanding its consumers. “Think of it as the foundation of your house,” Penick said. “The experience will be invisible to consumers. This is the foundation we’re choosing to build upon.

“The replatforming of Bergdorf Goodman has the largest potential,” Penick added, explaining that Neiman Marcus Group will go after this low-hanging fruit as its first initiative with Farfetch.

Neiman Marcus is not new to international retail. The group in 2014 purchased Munich-based omnichannel luxury retailer Mytheresa. When Mytheresa went public in 2014, it had less than $100 million in revenue. It’s now on track to log in $700 million in 2022, van Raemdonck said, adding, “The Neiman Marcus Group groomed Mytheresa for this success. It now operates as a public company. We know what it is to own an overseas luxury player.

“Farfetch is the largest pure-play and we’ll operate on the same hardware, Farfetch Platform Solutions,” van Raemdonck said, likening it to Amazon’s AWS. “It will be different than what we could do ourselves with our own tech team.”

Van Raemdonck described Farfetch as a “stylized machine learning-based company. We can leverage and scale our business,” he said. “As we think of the U.S. online customer and those we’ll attract globally, we have a suite of services we can offer, including access to sales associates” who can help with product recommendations and product knowledge.

“The omnichannel piece is important for Bergdorf Goodman. Wherever you go in the world, you can always visit the most beautiful corner of the world, the corner of Fifth Avenue and 57th Street,” van Raemdonck said, referring to Bergdorf’s address. “We’re going to grow with the luxury customer.”

Van Raemdonck said the strategic partnership with Farfetch will focus on three pillars: the omnichannel aspect of Neiman Marcus and Bergdorf Goodman, where clients can shop online or in a store; sales-assisted opportunities, where associates will make recommendations, and curation. “We don’t believe in endless aisles,” the Neiman Marcus Group CEO said. “What’s exciting is we have this omnichannel strategy and our partner believes in our strategy. It’s a reaffirmation of our omnichannel direction.”