Bankrupt Barneys New York Will Continue as an In-Store Shop at Saks
It’s the end of an era for New York fashion luxury.
The sale of the intellectual property of the iconic Barneys New York department store, a taste-making chain with history going back to 1923, to Authentic Brands Group was approved in federal bankruptcy court in Poughkeepsie, N.Y on Friday after rivals bids failed to materialize.
Authentic Brands, whose properties include apparel and accessory brands Vince Camuto, Nine West, and Juicy Couture, will license the Barneys name to another iconic Manhattan luxury retailer, Saks Fifth Avenue. The first step on that front, Authentic Brands said in a statement, will be “to reboot Barneys New York on the fifth floor” of Saks’ flagship, which has undergone a $250 million renovation.
As for Barneys’ Madison Avenue flagship in New York, Authentic Brands said it would become a “pop-up retail experience” with boutiques, entertainment, and some art and cultural events. Authentic didn’t give a timeline or more details about the change.
The New York Times reported that B. Riley Financial would soon start liquidating Barneys’ stores, though it is possible one or two might be spared. Authentic Brands said it would open a new Barneys but did not say where. Barneys filed for bankruptcy in August, unable to reach a deal with its Madison Avenue landlord, which wanted to dramatically increase its rent.
Barneys, which started as a discount clothing store for men in 1923, became one of America’s most revered names in luxury by being more adventurous than Saks Fifth Avenue, Bergdorf Goodman, and other more traditional brands.
At its prime, Barneys served as the launching pad for edgier brands like Dries Van Noten, Alaïa, and Proenza Schouler. Barneys wasn’t the go-to for society ladies or portfolio managers. Instead, Barneys attracted leading-edge types, with its original store in Manhattan’s Chelsea district, interwoven with New York’s downtown art and music communities.
But Barneys’ problems have been years in the making. Twenty years ago the owners pushed an ill-advised national expansion program, opening stores in places like Seattle and Scottsdale, Ariz., even though Barneys was viewed by many as too edgy to be viable beyond New York City and Los Angeles.
“Barneys is very much a niche player, very fashion forward, and has a core customer in New York and Beverly Hills,” says Steve Sadove, a former CEO of Saks Inc. and a founding Partner at private equity firm JW Levin Management Partners. “Was there ever a market for Barneys in some of these cities?”
Yet despite its financial problems, Barneys kept expanding over the last decade, including a second Manhattan store in 2016. Other upcoming plans included a store at the soon-to-open American Dream mall in New Jersey and at the Bal Harbour luxury mall in Miami.
Meanwhile, Barneys’ e-commerce firepower was paltry in comparison to those of Nordstrom, Neiman Marcus, and Saks. Online stores like Net-A-Porter and Farfetch ate into its sales, as did the stand-alone stores opened by many of the brands the retailer sold. It was also ominous for Barneys that Nordstrom and Neiman Marcus, both capable retailers, have opened big new Manhattan flagships this year.
The Barneys name will live on, with in-store shops at Saks, though there are no details yet on those plans. Fred’s, the iconic eatery at Barneys’ Madison Ave. store, will be exported to luxury destinations globally, Authentic Brands said.
With the luxury market more crowded than ever, adding the Barneys shops could give Saks the extra edge it needs to differentiate itself from the competition.
“Saks needs to make its assortment a little more fashion forward anyway,” said Sadove.
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