The high rent in his main Manhattan store is affecting Barneys, which could lead to bankruptcy protection, according to reports. (Photo: Tom Sibley / Barneys)
According to two media reports, Barneys may be on the verge of filing for bankruptcy protection, as Manhattan's luxury retailer competes with high rents and online shoppers.
Reuters, citing unnamed sources, reported on Saturday that Barneys turned to the law firm Kirkland & Ellis LLP and is weighing a possible bankruptcy among other options that could occur in the coming weeks.
The move is largely to address costly leases, especially its main location on Madison Avenue in Manhattan, which are hampering the retailer's business, according to the report.
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CNBC also confirmed the report, citing unnamed sources, noting that rent at the Madison Avenue store went from approximately $ 16 million to $ 30 million in January, almost eliminating the retailer's earnings before interest, taxes, depreciation and amortization. The location is owned by Ashkenazy Acquisition Corp.
Other retailers with Manhattan's iconic locations have faced similar circumstances and, ultimately, closed those stores. Ralph Lauren closed his Fifth Avenue store in 2017. Lord & Taylor closed his flagship Fifth Avenue in January.
If it goes bankrupt, Barneys would follow a long list of retailers, especially mall brands, to succumb to the changing retail landscape.
Sears, Toys "R" Us, Payless and Gymboree also filed for bankruptcy in the last year.
I would also highlight that luxury brands are also vulnerable to the stiff competition from online retailers, especially Amazon.
Discount shoe retailer Payless ShoeSource will close all of its stores when it files for bankruptcy later this month. Mercer Morrison de Veuer has the story.
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