Prepare yourself accordingly: Your heart may just break over this latest bit of retail news. In July, Business of Fashion reported Barneys New York, one of Manhattan's most iconic department stores, could be preparing to file for bankruptcy. According to BoF, Barneys was struggling with high rents and changing consumer tastes. 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 Tuesday, the retailer officially filed for Chapter 11 bankruptcy protection. Barneys New York 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 response to these obstacles, the Barneys New York Board and management team have taken decisive action by entering into a court-supervised process, which will provide the Company the necessary tools to conduct a sale process, review our current leases and optimize our operations.”
The bankruptcy will see Barney 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.
"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," the company added.
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 explains. “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 develops.
This story was originally published on July 15, 2019.