Barneys' Madison Avenue location in Manhattan will keep its doors open for another 12 months, thanks to a last-minute deal between a Barneys New York landlord and new owner Authentic Brands Group, both companies said on Friday. The companies "continue to explore longer term solutions," according to a statement emailed to Retail Dive from Daniel Levy, president of property owner Ashkenazy Acquisition Corporation.
Nevertheless, store closing sales commence this week there and at the other four flagships (in Manhattan's Chelsea district, Los Angeles' Beverly Hills, San Francisco and Boston's Copley Place), as well as at two Barneys Warehouse off-price stores, according to a press release from B. Riley-owned Great American Group and Tiger Capital Group, both liquidators. Barneys "most loyal customers" get early access to the sale.
The Madison Avenue store will host a "yet to be named pop-up retail experience which will occupy approx. 4 floors," an ABG spokesperson told Retail Dive in an email. The store's Fred's restaurant will remain open as well, Levy said. Ashkenazy owns the property occupied by the stores on Madison Avenue and in Beverly Hills.
The 11th hour save of the iconic Barneys Madison Avenue store, however temporary it may turn out to be, demonstrates the endurance of the brand.
Despite the agreement, Levy expressed chagrin about the $270 million sale to the brand-management company, which was approved by a bankruptcy judge on Friday. Both Ashkenazy-affiliated locations are profitable, to the tune of $20 million in New York and $30 million in Los Angeles each year "even after the recent rent resets at both locations," he said on Friday.
"We are extremely disappointed by the outcome of today's proceedings. We worked tirelessly with potential buyers and operators to preserve Barneys operations at our properties," he said on Friday. "We are saddened by the loss of jobs for Barneys employees and the iconic standalone brand," he also said.
Skyrocketing rent on the Madison Avenue store was reportedly a major factor in the company's financial woes, which came to a head over the summer. In any case, whatever the "longer term solutions" may be, they won't be spearheaded by Barneys CEO Daniella Vitale, who notified staff of her departure Friday morning as competing bids fizzled and the sale became official, according to a report from Women's Wear Daily.
As the bankruptcy process winds down, there's much work to be done. Barneys retains "a lot of brand cache among its core customers and target demographics," centered mainly in New York and Los Angeles, according to Ray Hartjen, marketing director of RetailNext.
"While Authentic Brands will have to be careful on how it moves forward, it should be able to protect the brand's identity and strong following," he said. "The key to success, of course, is going to be whether it can build the brand, rather than survive as a smaller, stagnant niche. It's where Barneys failed on its own."
And any success will depend on expanding the brand's reach, he also said, warning that new fans will have to be earned. "That's a strong uphill battle for any fashion brand," he said. "There's a lot of noise in the market — competition — and breaking through requires a strong brand and an even stronger value proposition. Barneys had one; it needs the other."