Barneys, whose chic Beverly Hills outpost is a shopping destination for the trendy, the rich, and the rich and trendy, announced on Monday that it was filing for Chapter 11 bankruptcy protection. According to CNBC, the brand’s Madison Avenue flagship fell victim to a mega rent hike, from $16 million to $30 million in January, which wiped out the store’s profits.
As a result, Barneys will now close 15 of its 22 locations, six of them in Southern California, including stores at the Grove, the Americana at Brand, and in Santa Monica. Beverly Hills is in the clear for the moment, as are New York, San Francisco, Boston, and a new store opening in September at the American Dream Mall in Rutherford, New Jersey. The company has reportedly secured $75 million in new capital to cover at least some of its debt.
Bankruptcy rumors have been rampant for the past three weeks, and, as The New York Times reports, designers who sell to Barneys have been freaking out over fall orders placed five months ago that now might never be paid for. In fact, Balenciaga, the Row, Givenchy, Gucci, Prada, Celine, Yves Saint Laurent, Prada, and Gucci are owed between $1 million and $3.7 million by the store. Shoe designers Christian Louboutin, and Manolo Blahnik are each owed about a million dollars. These are only some of Barneys’ outstanding debts, and you can imagine how their employees are feeling: nervous.
Like a multiple divorcee, Barneys has been down this road before. It filed for bankruptcy in 1996, due to an over-expansion at the time. But the shopping landscape was wildly different then: internet shopping barely existed, 9/11 hadn’t happened yet, and interest in fashion was at an all-time high.
Will the last five stores remain standing? Will a suitable buyer step forth to save them? Will Victoria Beckham have a place to shop in L.A.? And will local Nordstrom, Saks, and Neiman Marcus survive the widespread retail downturn? The New York Timesreprinted a prophetic quote from the founder of luxury outlet malls Value Retail, Scott Malkin. He told the paper: “The war is over. Alibaba won.”