NEW REDUCTIONS!
Neiman Marcus fears prompt shrinkage: sources
The Neiman Marcus flagship going up on Manhattan’s far West Side is getting downsized, The Post has learned.
The embattled upscale department store chain is in talks to reduce its square footage as it frets over developer Related Cos.’ ability to attract tenants and shoppers alike to the ambitious Hudson Yards project, sources told The Post.
The three-story, 250,000square-foot store could shrink by roughly 25 percent, or 70,000 square feet, one source said. Another cautioned that the downsizing was more “incremental” — perhaps just a 10,000-square-foot retrenchment.
Either way, the move by Neiman to cut back on its square footage reflects the jittery nerves affecting all of retail as more sales go online.
Both companies say they are committed to opening the store — which was slated to debut in 2018 but recently was pushed back to 2019. Both sides declined to comment on plans to scale back Neiman’s store.
“As always contemplated, Neiman Marcus is now well under construction on their flagship that spreads across three floors of the Shops & Restaurants of Hudson Yards,” Related said in a statement.
A Neiman spokeswoman deferred to Related’s statement.
A lot has changed since Neiman — which also owns the Bergdorf Goodman stores on Fifth Avenue — inked a deal in 2014 to build its first namesake in the Big Apple. Luxury retailers have been hit by plunging mall traffic, as shoppers’ increasingly buy online and favor mixing and matching high-priced items with jeans and T-shirts.
“The question becomes, given the environment, do they really need 250,000 square feet?” said one retail executive who asked not to be identified. “It sounds really big.”
The wrangling over the Neiman store, the only major anchor slated to open at the complex, exposes concerns on both sides about Hudson Yards, a massive 1-millionsquare-foot complex of commercial, residential and retail space on the far west side of Midtown, sources said.
A smaller store reduces Neiman Marcus’ financial risk, but it may also have a domino effect on Related’s ability to attract and retain other luxury retailers to the development, experts say.
Related says that the retail portion of Hudson Yards has commitments from retailers to occupy 70 percent of its available space.
As reported by The Post in May, top brass at Related and Neiman earlier this year met at the offices of investment bank Lazard — Neiman Marcus’ recently hired financial adviser — to discuss whether Related might take an ownership stake in the department store.
Neimanhasreporteddeclining sales in each of the past seven quarters and is burdened by nearly $5 billion in debt.
Owned by private equity investors — Ares Management and Canada Pension Plan Investment Board — Neiman in March said it was exploring a potential sale of the company.
Saks Fifth Avenue owner Hudson’s Bay Co. was the leading candidate to acquire Neiman, but in June the companies ended their negotiations and Neiman said it was no longer for sale.