UPDATE: Barneys New York Files for Bankruptcy and Announces the Closure of 15 Stores
See the full list here.
UPDATE (August 6, 2019): After a month of speculation regarding Barneys New York filing for bankruptcy, USA Today has just confirmed that the American chain of luxury department stores has filed for Chapter 11 bankruptcy protection on Tuesday and will close 15 of its 22 stores. The affected locations include Chicago, Las Vegas and Seattle, five small concept stores and seven Barneys Warehouse stores.
Daniella Vitale, Barneys CEO and president, said in a 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. 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.”
The company plans on keeping five flagship locations, two New York locations (Madison Avenue and Downtown New York City), two in California (Beverly Hills and San Francisco) and the Boston store at Copley Place. Two warehouses will remain open along with its Barneys.com and BarneysWarehouse.com websites.
Here’s the full list of stores that the company has decided to shut down:
- Cabazon: 48650 Seminole Drive, Desert Hills Premium Outlets
- Camarillo: 850 East Ventura Blvd., Camarillo Premium Outlets
- Carlsbad: 5620 Paseo Del Norte, Carlsbad Premium Outlets
- Glendale: 869 Americana Way, The Americana at Brand
- Los Angeles: 189 The Grove Drive
- Santa Monica: 395 Santa Monica Place
- Sunrise: 1840 Sawgrass Mills Circle, Sawgrass Mills
- Waipahu: 94-790 Lumiaina St., Waikele Premium Outlets
- Chicago: 15 East Oak St.
- Rosemont: 5220 Fashion Outlets Way, Fashion Outlets of Chicago
- Las Vegas: 3327 Las Vegas Boulevard South
- New York: 194 Atlantic Ave., Brooklyn
- Riverhead: 200 Tanger Mall Drive, Tanger Outlets
- Philadelphia: 1811 Walnut St.
- Seattle: 600 Pine St.
UPDATE (July 26, 2019): With speculations of financial trouble on the way, Barneys New York is reportedly in talks with Wells Fargo and other lenders regarding a loan to keep the business afloat during a bankruptcy filing. According to Bloomberg, there are early discussions of a debtor-in-possession loan that would allow Barneys to proceed with business as usual while negotiating a deal in court with landlords and lenders.
Sources have revealed that other potential options include business partnerships or finding buyers from Canada and Europe. While Wells Fargo has not commented, a representative from Barneys released 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 for more updates on the situation.
UPDATE (July 23, 2019): WWD has just reported that Barneys New York might be facing bankruptcy as early as this week. The luxury department store said that they were “actively evaluating opportunities to strengthen our balance sheet and ensure the sustainable, long-term growth and success of our business.”
Two sources have confirmed that a bankruptcy filing could come this week, with one indicating that it could come by Wednesday. After the statement was released, certain vendors have stopped approving the retailer’s orders. “Because they went public with it, they kind of scared everybody off,” one industry source said, citing the company’s reaction to news reports.
In order to get back on track, the company needs to drive sales to cover its costs, but that has become difficult to maintain as vendors have started to worry more. However, due to its double increase on rent as previously mentioned, that may have been the company’s final straw leading it to its current situation.
In the ’90s, the American chain of luxury department stores Barneys New York went bankrupt due to the over-expansion of large stores being located in cities where consumers weren’t familiar or interested in the company’s brand of luxury and unique merchandise edit. With that being said, Barneys has always had a questionable reputation when it comes to its financial track record on paying vendors.
According to WWD, owner Richard Perry has failed to sell the business over the years and is now “actively evaluating opportunities to strengthen its balance sheet” where possibilities vary from finding an investor, incurring debt or declaring bankruptcy. Rent is also an additional factor when it comes to retail bankruptcies, although Barneys does not have significant debt, it did get an increase in rent from $16 million USD to more than $30 million USD a year for its Madison Avenue flagship.
In addition, vendors have expressed concern regarding the company’s overdue payments suggesting issues with liquidity. Statements from Barneys executives have indicated that the business is overall healthy with significant e-commerce gains and has plans to expand in New Jersey and Miami. However, reports of a likely bankruptcy have appeared on CNBC last weekend. “We continue to work closely with all of our business partners to achieve 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,” Barneys said in its statement.
No further reports have been released, so stay tuned for any updates.