Retail

Barneys Looks Into Bankruptcy Amid Rent Increase

Barneys Set To File For Bankruptcy

With a liquidity crunch brought on by a rise in rent at its flagship in New York City, Barneys New York is reportedly preparing for a bankruptcy filing. The luxury retail has engaged financial advisers M-III Partners and law firm Kirkland & Ellis to help with the possible preparations, CNBC reported per unnamed sources.

A Barneys spokesperson told the outlet, “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 spokesperson continued, “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 advisers are reportedly looking into many options that encompass bankruptcy in addition to others that would aid it in avoiding a bankruptcy filing like securing further financing or a sale. Unnamed sources in the report, however, put in the caveat that a bankruptcy filing is not certain.

Rent at the retailer’s Madison Avenue flagship increased to roughly $30 million in January from approximately $16 million. According to previous reports from the outlet, that nearly wiped out earnings prior to tax, interest, amortization and depreciation.

Barneys dates back to the 1920s at the time that Barney Pressman opened the doors to a clothing shop on Seventh Avenue and 17th Street. Fred Pressman, who was Barney’s son, took over the store and guided its move from a discount store to a luxury retailer in the 1970s. The retailer then made its mark on luxury fashion in New York and introducing designers such as Giorgio Armani while creating its foothold in menswear.

The news comes after it was reported in January that Lord & Taylor announced that it has left its landmark New York City Fifth Avenue store. The retailer’s parent company, Hudson’s Bay Company (HBC), sold the iconic 676,000-square-foot building to WeWork in fall 2017 for $850 million, in a deal aimed give WeWork a new headquarters and lower HBC’s debt levels.

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