MANHATTAN (CN) – Facing weak sales, online retail competition and the extreme costs of Manhattan rent, the luxury clothier Barneys New York filed for Chapter 11 bankruptcy protection Tuesday.
Barneys entered the petition this morning in U.S. Bankruptcy Court for the Southern District of New York, listing more than $100 million in estimated liabilities, and more than $100 million in assets.
The Chapter 11 filing will allow nearly hundred-year-old sartorial institution to stay open while it finds a buyer and keep open seven stores including the 10-story Manhattan flagship location on Madison Avenue, where rent doubled to nearly $30 million this year.
Stores in Boston; Beverly Hills, California; and San Francisco will remain open, but locations in Chicago, Las Vegas and Seattle are set to close, along with a dozen concept and warehouse locations. Two warehouse locations in New York and California will remain open.
Earlier this year, the Beverly Hills location launched the High End, a luxury cannabis lifestyle and wellness concept boutique that sold high-end accessories for the state’s recreational marijuana and CBD consumers.
Barney’s says it would be reviewing all of its leases.
The bankruptcy filing lists New York hedge fund Perry Capital as the majority stakeholder, while Yucaipa Companies, an investment firm owned by billionaire Ron Burkle, holds a 20% ownership.
Coresight Research reports that the number of retail store closings in the U.S. this year has already surpassed the 5,864 in total that shuttered in 2018,
Coresight counted more than 7,500 retail stores closed so far in 2019, predicting that number to hit 12,000 by year’s end.
The United States’ escalating trade war between China under the Trump administration has exacerbated that pressure on retailers, leaving clothing companies scrambling to find new routes and suppliers. Consequently, the retail sector has shed jobs over the last year.
Barneys’ department store competitors Nordstrom has reported slowing sales and Neiman Marcus Group, which also operates Bergdorf Goodman, posted a loss and declining sales in its most recent quarter.
After 104 years in business, Lord & Taylor’s flagship department store on Fifth Avenue closed its operations in January and sold the property to WeWork for $850 million.
Barneys’ roots date back to 1923, when Barney Pressman used the proceeds of his wife’s pawned engagement ring to open a 500-square-foot men’s discount-clothing store on Seventh Avenue and 17th Street in Manhattan.
Pressman’s son pivoted the company’s focus to upscale luxury clothing in the 1960s through collaborations with European designers Hubert de Givenchy and Pierre Cardin. The company expanded nationwide in the 1990s.
Barneys previously filed for bankruptcy in 1996 after a falling out with Isetan Company, a prominent Japanese department store chain who invested in Barney’s global expansion.