NEW YORK CITY: Luxury department store Barneys New York Inc. filed for bankruptcy protection from its creditors on Monday due to rent rises and fewer foot traffic. The Chapter 11 filing allows for the stores to stay open until Barneys works out a plan to pay its debts and turn the business around.
On July 13, Reuters reported the chain of stores were considering bankruptcy, a notion which sent the internet into a spin and fashion publishers ordering editors to chronicle Barneys’ every move. “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,” a company spokesman said in a statement at the time. Translation: The chain was soughing to avert bankruptcy by finding a partner or buyer.
Earlier this year, the company sought to downsize its Madison Avenue store in an effort to reduce the store’s USD $30 million (AUD $43 million) annual rent cost, according to the New York Post. (Madison Avenue opened its doors in 1993 and was the largest specialty store to be built in Manhattan since the Depression.)
Rent fees weren’t the only issue. In fact, as Vanessa Friedman writes for The New York Times, “the sector as a whole has been experiencing a major retrenchment in the face of changing consumer shopping habits and the growth of e-tail, which has made going to a store much more about experience than just buying stuff.”
As concerns the rumours were true began gaining more and more traction – Barneys recently openly started selling luxury cannabis products at its Beverly Hills outpost – designers refused to send their products to Barneys for fear they would not get paid.
According to federal papers filed in the US bankruptcy Court for the Southern District Of New York on Monday, the chain listed estimated liabilities of between $100 million and $500 million.
Founded as a men’s retailer in 1923, Barneys was an icon of high-end fashion for men and women for decades.
More to come.