Prepare yourself accordingly: Your heart might just break over this retail news. After Business of Fashion reported in July that Barneys New York — one of Manhattan's most iconic department stores — was preparing to file for bankruptcy, many were concerned that the household name might actually shutter its doors. According to BoF, Barneys struggled to stay afloat, citing high rents and changing consumer tastes as reasons for its rapid decline. Not to mention Barneys had failed to adapt to the changing landscape of retail, racially profiling Black customers and carrying limited sizes despite 67% of women in the U.S. wearing a size 14 or larger. On Friday, the New York Times reported the retailer was “sold for parts” to Authentic Brands Group, which owns Juicy Couture and Nine West, officially marking the end of their franchise.
Barneys' flagship store on Madison Avenue will remain open for another year, while most of its remaining stores will close. According to the Times, the 275,000-square-foot space will become a “four-floor pop-up with entertainment that fosters creativity and community.” The liquidation sale at Barneys retail locations and website will be 5%-20% off, while the prices at Barneys Warehouse will be discounted by 20%-30%.
Manhattan aside, 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. The retailer maintains it will keep its five flagship locations in New York, San Francisco, Los Angeles, and Boston, as well as its online stores Barneys.com and BarneysWarehouse.com open for business.
Back in August, after the retailer officially filed for Chapter 11 bankruptcy protection Barneys New York leadership issued the following statement:
“For more than 90 years, Barneys New York has been an iconic luxury specialty retailer, renowned for its edit, strong point of view, creativity and representation of the world’s best designers and brands,” said Daniella Vitale, Chief Executive Officer & President said via press release. “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.”
In October, WWD reported a Barneys attorney told New York bankruptcy Judge Cecelia Morris that the retailer received an offer from a lender who has apparently supported the company while it works through its bankruptcy proceedings. Currently, the retailer is trying to figure out how to keep its physical stores open as part of its agreement.
Why the rush? According to WWD, “the race to buy Barneys took a decisive turn on Monday, after a whirlwind weekend when ABG worked to put together a nearly $270 million USD bid to purchase the Barneys name and potentially license it for use at Saks Fifth Avenue stores.” That, and the company is expected to go up for auction again on October 24.
"At Barneys New York, our customers remain our top priority and we are committed to providing them the excellent services, products, and experiences they have come to expect," the company told Business of Fashion in a statement in July. "We continue to work closely with all of our business partners to achieve the goals we’ve set together and maximize value. To that end, 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."
As Forbes explained in July, when the bankruptcy speculation began, this is not necessarily a bad thing for the retailer. It all depends on the type of bankruptcy. If it’s a reorganization, as opposed to a liquidation, there’s still hope for the future of the company. “Reorganization is where the creditors or a new investor take over ownership of the company and the existing debt is forgiven or repaid at a discount from the original loan amount,” Forbes explained. “In a liquidation, the company is, well, liquidated and it ceases to exist.” Plus, this isn't the first time that Barneys New York filed for bankruptcy. Previously, the brand filed Chapter 11 reorganization and the change was not obvious to customers.
We'll be following this story closely to see how it continues to develop.
This story was originally published on July 15, 2019.