UPDATE (September 9, 2019): Following its recent announcement of having filed for Chapter 11 bankruptcy, Barneys New York has just launched a new campaign “Dear Shopper” to remind everyone: “Like a lot of us out there, we have had our share of financial struggles. But despite what you may have heard, Barneys is here to stay.”
While the bankruptcy saw Barneys closing down 15 of its 22 stores, it is continuing to run its five flagship locations in New York, San Francisco, Los Angeles, and Boston, as well as its online stores Barneys.com and BarneysWarehouse.com.
Barneys’ initial lifeline of $75 million USD from affiliates Hilco Global and Gordon Brothers Group was replaced by a $218 million USD extension by Brigade Capital Management and B. Riley Financial. The larger offer paid out the former $75 million USD loan while adding a further $143 million USD, giving Barneys New York time until October 24 to find a buyer and avoid liquidation.
UPDATE (August 6, 2019): American luxury retailer Barneys New York has officially filed for bankruptcy. The news comes after a month-long speculation following reports of the retail giant facing financial difficulties largely due to an insurmountable increase in rent charges.
After filing for Chapter 11 bankruptcy protection on Tuesday morning, Barneys issued a statement explaining the predicament and that the company has managed to secure $75 million USD from affiliates Hilco Global and Gordon Brothers Group to resolve its financial commitments to various parties. According to a statement from CEO Daneialla Vitale, “Like many in our industry, Barneys New York’s financial position has been dramatically impacted by the challenging retail environment and rent structures that are excessively high relative to market demand.” She says that the Chapter 11 filing will allow Barneys “to conduct a sale process, review our current leases and optimize our operations.”
The bankruptcy will see Barneys closing down 15 of its 22 stores, including its Chicago, Las Vegas and Seattle branches, seven of the company’s nine Barneys Warehouse stores and five “concept stores.” However, the company maintained that it will continue running its five flagship locations in New York, San Francisco, Los Angeles, and Boston, as well as its online stores Barneys.com and BarneysWarehouse.com.
It’s not the first time Barneys, which first opened its doors almost a century ago in 1923, has filed for bankruptcy. The luxury retailer filed for bankruptcy for the first time in 1996 when it was in dispute with its Japanese owner Isetan, which led to multiple store closures. In 2012, it narrowly dodged bankruptcy filings again thanks to a bailout from Perry Capital, which itself shut down by 2016.
UPDATE (July 26, 2019): Amidst financial turmoil, Barneys New York is now reportedly in talks with Wells Fargo regarding a new loan in preparation for bankruptcy. The luxury retailer is hoping to obtain a debtor-in-possession loan from its existing lender and is currently negotiating terms. The loan will allow operations to proceed as usual while Barneys focuses on attaining a deal in court with its lenders and landlords.
Sources close to company have revealed to Bloomberg that the talks are only in its early stages, and Barneys is still considering alternative options to keep its business afloat, including various partnerships or potential buyers from Canada and Europe. However, if Barneys does decide to file for bankruptcy, the court filing could come as early as next week.
While Wells Fargo declined to comment, a representative from Barneys issued the following statement via email:
“We continue to work closely with all of our business partners to achieve the goals we’ve set together and maximize value. Our board and management are actively evaluating opportunities to strengthen our balance sheet and ensure the sustainable, long-term growth and success of our business.”
Stay tuned as the story develops.
ORIGINAL STORY (July 15, 2019): Luxury retailer Barneys New York is reportedly facing financial turmoil due to the high rent rates for its Manhattan flagship store. Prices for rent have almost doubled for the retailer, as not too long ago, rent sat at $16 million USD, but has now shot up to $30 million USD.
The steep incline has led to the company’s finances faltering, with close sources to Barneys revealing to Reuters that the retailer has approached law firm Kirkland & Ellis to begin preparing for a possible filing for bankruptcy. However, the report also stated that it remains unclear whether Barneys New York will actually follow through with that course of action. The retail giant has since released a statement saying that it is currently “evaluating opportunities to strengthen our balance sheet and ensure the sustainable, long-term growth of our business.”
Barneys New York was founded in 1923, and became the first American department store to provide the full line from Giorgio Armani. It now has more than 10 stores across the States, in locations such as California, Florida, and Illinois. A franchise agreement has also put 12 stores under its name in Japan. Despite its successes, commentators believe that skyrocketing popularity of e-commerce giants such as Amazon has led to an increase in pressure on brick and mortar retailers — luxury stores are equally affected.
This is not the first time Barneys New York has been in financial trouble. In 1996, the company declared bankruptcy for the first time, leading to multiple locations being closed down. Later on in 2012, the company’s debt load was reduced thanks to a backing by Perry Capital. However, by 2016, Perry Capital shut down. While there is no conclusive course of action by the company for the time being, it will be interesting to see what happens in the near future. Stay tuned for more news to come.
Elsewhere in the fashion world, Chanel just hired its first Head of Diversity and Inclusion.