Luxury department store icon Barneys files for bankruptcy

Andrew Weber
August 06, 2019 - 8:11 am
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NEW YORK (1010 WINS) — Barneys New York, an iconic New York department store for almost a century, filed for bankruptcy Tuesday morning.

The plan the luxury retailer filed called for keeping just five of its 10 existing outlets open, including its flagship on Madison Avenue and a location in downtown Manhattan.

Barneys says it will close stores in Chicago, Las Vegas and Seattle as well as seven Barneys Warehouse stores.

Barneys filed for bankruptcy once before, in 1996, after a fight with its then owner, Japanese department store company Isetan.

Barneys New York Inc is exploring options that include a bankruptcy filing, as it struggles with high rents and changing consumer tastes, according to people familiar with the matter. The nearly 100-year-old retailer, known for its high-end designer collection, is working with law firm Kirkland & Ellis LLP to prepare for a potential #bankruptcy filing that could happen in the coming weeks. #Barneys has not yet made a final decision on whether or not to seek bankruptcy protection, and is weighing other possible solutions for addressing high rents that are straining its business. Sources have stated that filing for bankruptcy would be one option to deal with expensive leases. The retailer's flagship department store on Madison Avenue in #Manhattan has weighed on its finances. Should it file for bankruptcy, Barneys would be one of the most high-profile victims of the downturn in retail, and underscore how even luxury department stores are not immune from fierce competition with e-commerce firms such as Amazon.com Inc. Other retailers including, Sears Holdings Inc, Toys "R" Us Inc and Gymboree Group Inc have also filed for bankruptcy in roughly the past year. In addition to its upscale department stores, Barneys operates BarneysWarehouse outlets, as well as Freds restaurants. In all, Barneys has 28 locations, according to its website. Its most prominent locations include Beverly Hills, California; Chicago; Seattle; Boston; San Francisco; and Las Vegas. ✒️: @reuters --: @gettyimages

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A rise in rent at its Madison Avenue store is a primary cause for the filing, with rent jumping from $16 million to $30 million in January, which almost erased all of the chain’s earnings.

The power of brands to rent space in the store to sell directly to customers as well as competition from online retail have hurt Barneys.

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