Will Barneys File For Bankruptcy?
In January I mentioned that Barneys New York might be up for sale but now the luxury department store might be headed on a different path. Bloomberg News is reporting that the store is looking at either a debt restructuring or a bankruptcy filing. Dubai-based investment fund Istithmar World bought the luxury chain at peak value for $942 million in 2007. But after a year of slumping sales the company is feeling the increasing pressure of its boatload of debt. Earlier this year Barneys got a major infusion of money to allow it to pay for its shipments for the rest of the year.
Bloomberg says that Perry Capital, the hedge fund firm that helped finance the 2007 buyout, has been approached by the Canadian department store chain Holt Renfrew on an offer of join control of Barney's. Holt Renfrew has stores in major Canadian cities including Montreal and Vancouver. Getting a partner might be the best shot for saving the struggling retailer since it's unlikely that a buyer would come forward at this point. According to the article, Barneys and its owners are still considering what to do. With an uncertain holiday season approaching the store may have to make a move soon. Luxury department stores are cautiously optimistic that this season may be better than last but it probably won't be strong enough to alter the situation for stores that are struggling.
Why might Holt Renfrew want Barneys? If the Toronto-based chain ever wanted to make forays into the United States this would present a nice opportunity. The chains are of similar size. Holt Renfrew has nine stores throughout Canada. Barneys has nine department stores in major cities and like other stores such as Saks and Nordstrom it also has thriving business in outlets (it has 13) and lower priced stores (19 Co-OP stores). Both stores stock the same types of designer brands including Marc Jacobs, Zac Posen and Michael Kors.