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The luxury retailer Barneys New York is currently preparing a bankruptcy filing that may occur this month, told CNBC people familiar with the subject.
Barneys, faced with a cash shortage caused by rising rents at its Manhattan lighthouse, has hired Kirkland & Ellis law firm and financial advisers to partner with M-III to help with potential preparations , said the officials. Advisers are considering a range of options, including bankruptcy, as well as those that would help him avoid filing for bankruptcy, such as a sale or the guarantee of additional financing, say the interviewees.
People have warned that if Barneys was exploring a bankruptcy case, we are far from certain.
A Barneys spokesperson told CNBC: "At Barneys New York, our customers remain our top priority and we are committed to providing them with the excellent services, products and experiences they expect." The spokesperson added that "our board of directors and management are actively evaluating opportunities to strengthen our balance sheet and ensure the long-term, sustainable growth and success of our business."
Barneys is one of the many department stores to deal with the difficulties faced by online shoppers or directly with brands. Nordstrom is trading close to $ 20 per share, lower than the $ 50 buyback bid it had rejected two years ago as too low. Hudson's Bay Company, owner of Saks, plans to move to the private sector after the fall of nearly 50% of its shares during the year of June. Macy's shares are down 40% over the last year.
Department stores are also struggling to trim their declining sales and an expensive store park, which includes more than 10 eponymous stores in New York, California, Chicago, Massachusetts, Las Vegas, Seattle and Pennsylvania.
Manhattan has turned out to be particularly painful.
Rent at Barneys Lighthouse on Madison Avenue, owned by Ashkenazy Acquisition Corp., In January, CNBC reported that its earnings before interest, taxes, depreciation and amortization had almost jumped from about $ 16 million to about $ 30 million in January.
Many retail owners in downtown Manhattan invested in their property when retail was stronger, either by buying at high prices or by borrowing large loans based on high valuations. The rent charged is a reflection of these valuations. While retail has struggled and sales have dropped, the disconnect has affected both renters and homeowners.
Ralph Lauren closed his Fifth Avenue store in 2017, while Lord & Taylor closed its flagship Fifth Avenue in January.
Barneys, which makes a turnover of about $ 850 million, extended the term of its $ 50 million credit line in April, hoping for a buoy. safety. Nevertheless, the credit agreement with the existing lender Wells Fargo and the new lender, TPG Sixth Street Partners, was not enough to absorb the losses.
Barneys has been supported by Perry Capital, the fund managed by Richard Perry, since 2012. Perry closed his fund four years later, citing the prevailing industry and market winds.
Perry Capital has since largely existed as a "zombie fund", in which it holds Barneys but has not invested more.
Barney dates back to 1923, when Barney Pressman opened a discount men's clothing store on Seventh Avenue and 17th Street. In the 1960s, Barney's son, Fred, helped transition from a discount store to a luxury retailer. Barneys quickly made its mark on New York luxury fashion, relying on its roots in men's fashion and introducing stylists such as Giorgio Armani.
People have asked for anonymity because the information is confidential. M-III did not immediately respond to a request for comment. A message left to Perry Capital outside of business hours was not returned.
Reuters first reported possible bankruptcy plans.
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