NEW YORK (Reuters) – U.S. luxury department store Barneys New York Inc is exploring a bankruptcy filing as it struggles with high rents and changing consumer tastes, people familiar with the matter said on Saturday.
FILE PHOTO: People walk by a Barneys New York retail store in New York October 24, 2013. REUTERS/Eric Thayer
The nearly 100-year-old department store, known for its high-end designer collection, is working with law firm Kirkland & Ellis LLP to prepare for a potential bankruptcy filing that could come in the coming weeks, one of the sources said.
Barneys has not yet made a final decision on whether or not to seek bankruptcy protection, and is weighing other possible solutions for addressing high rents that are straining its business, the sources cautioned. Filing for bankruptcy would be one option to deal with expensive leases, the sources said.
The retailer’s flagship department store on Madison Avenue in Manhattan has weighed on its finances, one of the sources said. The sources asked not be identified because the deliberations are confidential.
“At Barneys New York, our customers remain our top priority and we are committed to providing them the excellent services, products, and experiences they have come to expect,” the company said in a statement.
“We continue to work closely with all of our business partners to achieve the goals we’ve set together and maximize value. To that end, our board and management are actively evaluating opportunities to strengthen our balance sheet and ensure the sustainable, long-term growth and success of our business,” the company added.
Should it file for bankruptcy, Barneys would be one of the most high-profile victims of the downturn in retail. Sears Holdings Inc, Toys “R” Us Inc and Gymboree Group Inc have also filed for bankruptcy in roughly the past year.
In addition to its upscale department stores, Barneys operates Barneys Warehouse outlets, as well as Freds restaurants. In all, Barneys has 28 locations, according to its website. Its most prominent locations include Beverly Hills, California; Chicago; Seattle; Boston; San Francisco; and Las Vegas.
Barneys made its name in the 1930s by placing women dressed in barrels outside beer halls in New York City, where they would hand out matchbooks advertising the store, according to the retailer’s website.
The store, now known for exclusive apparel made by designers such as Burberry Group Plc, began as a destination for middle-class families. It transitioned to luxury fashion in the 1960s.
Reporting by Jessica DiNapoli and Mike Spector in New York; editing by Jonathan Oatis