Luxury specialty retailer Barneys New York (BNNY.OB) Tuesday announced it has filed for Chapter 11 bankruptcy protection.
The company said it has secured $75 million in new capital to facilitate a going concern sale process. Barneys New York intends to use the court-supervised process to review store leases to best optimize the company’s operations and consider all value enhancing transactions.
The company is reportedly struggling with expensive leases hurting its business, especially its flagship department store on Madison Avenue in Manhattan. Barneys opened the store there in 1990.
In addition, the change in consumer tastes has caused lower sales and also weighed on Barney’s business. The retailer primarily focuses on upscale locations in New York to attract wealthy consumers and tourists.
CEO Daniella Vitale said, “Like many in our industry, Barneys New York’s financial position has been dramatically impacted by the challenging retail environment and rent structures that are excessively high relative to market demand. In response to these obstacles, the Barneys New York Board and management team have taken decisive action by entering into a court-supervised process, which will provide the Company the necessary tools to conduct a sale process, review our current leases and optimize our operations.”
Barneys will close its physical store locations in Chicago, Las Vegas and Seattle, in addition to five smaller concept stores and seven Barneys Warehouse locations.
Meanwhile, Barneys will continue to serve customers in five flagship locations: Madison Avenue, Downtown NYC, Beverly Hills, San Francisco and Copley Place in Boston, as well as two Barneys Warehouse locations, including Woodbury Common and Livermore.
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