Story Copyright Westfair Communications
Barney’s Inc., the world-renowned luxury specialty retailer based in Central Valley, Orange County, has declared bankruptcy.
Barney’s? Central Valley? Orange County?
Barney’s Inc. lists its principal place of business at Woodbury Common Premium Outlets, where it operates a Barneys New York Warehouse.
The Chapter 11 reorganization petition was one of five filed Aug. 6 by the august retailer.The other four – Barneys New York Inc., Barneys Asia Co., BNY Licensing Corp. and BNY Catering Inc. – use the corporate address, 575 Fifth Ave., Manhattan, 39 miles away from Central Valley.
All five cases were filed in federal bankruptcy court in Poughkeepsie.
Barney Pressman opened Barney’s Clothes, a men’s store, in 1923. The retailer eventually became an institution of fashion, an arbiter of style, a showcase of the world’s top designers in women’s and men’s clothing, accessories, jewelry, cosmetics and fragrances.
Barneys operates 13 “flagship” stores across the country, nine warehouse outlets and two digital platforms.
Like many brick-and-mortar apparel retailers, Barneys is losing business to internet retailers. It is also struggling with sharp rent increases, according to a court filing by Mohsin Y. Meghji, its chief restructuring officer. All 22 specialty stores and warehouse are leased.
Last year, Barneys reported about $800 million in revenue. But declining sales this year – $34 million less revenue than the same time last year – and dwindling cash flows have culminated in a liquidity crisis.
Vendors are refusing to ship goods unless Barneys pays cash on delivery.
“The lack of fresh and sufficient inventory further tightens the debtors’ liquidity,” Meghji stated, “creating a negative feedback loop. Without the flow of fresh inventory, the … retail business will effectively starve.”
Detailed financial schedules have not been posted yet, but first day filings list $190 million in debt obligations and another $100 million in unsecured trade debt.
The trade debt includes a who’s who of high fashion: Balenciaga, Chanel, Givenchy, Gucci, Manolo Blahnik, Prada, Yves Saint Laurent and more.
Barneys has arranged for potential financing of $75 million to pay down debts and fund operations, according to Meghji’s declaration, and several investors have expressed an interest in buying the retailer.
Cost cutting is also part of the reorganization plan. Barneys has identified eight “flagship” stores and seven warehouse outlets that accounted for $14.2 million in losses last fiscal year. It plans to close the 15 stores within 30 days.
The bankruptcy filing does not say whether the Woodbury Common store, the Central Valley home of Barney’s Inc., will be one of the two surviving warehouse stores.