U.S. department store operator and fashionista favorite Barneys New York Inc filed for bankruptcy protection on Tuesday and put itself up for sale, underscoring how even luxury retailers are struggling to freshen their image and compete with online rivals.
It’s where Lady Gaga once had her own pop-up shop… TV’s “Desperate Housewives” celebrated their show’s premiere… And royal couple Prince Charles and Camilla Parker-Bowles were spoofed in one of the store’s famously creative window designs.
Which is why it may be hard to believe that Barneys New York - once Manhattan’s "it" spot - filed for bankruptcy protection Tuesday and put itself up for sale.
(SOUNDBITE) (ENGLISH) BARNEYS SHOPPER JOCELYN CHARNAS SAYING: “Barneys is Mecca.
It’s the edgiest, the youngest, the coolest, the most interesting – and it’s a real loss to the city if it closes.” But such is retail life in the internet age, where even the most exclusive bricks-and-mortar businesses are in jeopardy of crumbling.
The luxury retail chain to close major stores in Chicago, Las Vegas and Seattle, along with five smaller concept shops and seven Barneys Warehouse locations, where it sold more heavily discounted items. The announcement coming just weeks after Reuters exclusively reported it was seeking bankruptcy protection as it struggles with high rents and changing consumer tastes.
But unlike fellow luxury retailers Henri Bendel and Lord & Taylor – which have disappeared from the Manhattan landscape - Barneys will try to keep to its main store on Madison Avenue afloat, despite its rent nearly doubling this year to 30 million dollars.
It now faces the challenge of keeping brands on board, says Reuters correspondent Melissa Fares.
(SOUNDBITE) (ENGLISH) REUTERS CORRESPONDENT MELISSA FARES SAYING: “If vendors like Louis Vuitton, Burberry’s start pulling back and not selling their merchandise and inventory to Barneys, you’re really going to start to see, analysts tell me, a death spiral.
They don’t need Barneys as much as they once did.
They have their own online shops, they have robust e-commerce platforms.” The nearly century-old chain filed for bankruptcy once before, in the 1990s.
The retailer says it’s secured $75 million in new financing to help keep some stores operating while under bankruptcy protection and while it searches for a new owner.