The Barneys filed for bankruptcy on Tuesday morning as the luxury retailer has been struggling amid soaring rents and falling sales. This the second time that the multi-brand store applied for bankruptcy protection. Its first court filing was in 1996, after a tiff with its Japanese owner, department store company Isetan. The filing was done to renegotiate its deal with Isetan and to pay the then excessive rent bills. Like the first filing, the second only also has the high rent on the forefront besides retail upheaval with online shopping.
The New York’s high-end store said that it would close five out of 10 namesake stores to reduce the rent strain. Besides, the retailer has decided to shut its stores in Chicago, Las Vegas and Seattle, as well as five smaller concept stores and seven Barneys Warehouse stores.
It would keep running its Barneys Warehouse stores in Woodbury Common and Livermore along with five namesake stores located in New York’s Madison Avenue, downtown Manhattan, Beverly Hills, San Francisco and Copley Place. Also, the company is on a lookout for a buyer to avoid liquidation.
Barney’s partial shut down echoed the pain of many other retailers who have been victim of the current surge in online shopping and consumers directly purchasing from brands. Online platforms like Yoox’s Net-A-Porter and Moda Operandi made, once inaccessible, luxury brands a click away for the customers.
With regard to the current slump in the retail industry, Barneys chief executive, Daniella Vitale, said, “The entire industry is in survival mode … the model is not working, it’s not working for Neiman [Marcus], it’s not working for Saks, it’s not working for us, it’s not working for Nordstrom. ”
The company is also planning on expanding its online business. The company told CNN in a statement, “We continue to evolve our strategy and business model for the benefit of all of our stakeholders through our forward-thinking and uniquely modern approach.”