- Barneys New York will likely soon be owned by Authentic Brands Group, part of a bankruptcy deal approved by judge Cecelia G. Morris on Thursday that would effectively shutter all remaining stores.
- Though the luxury department store is a favourite among celebrities and fashionistas, it has a history of financial strife and leadership challenges, beginning with its first bankruptcy in 1998.
- We took a closer look at the rise and fall of Barneys over the years.
- Visit Business Insider’s homepage for more stories.
After nearly a century of selling luxury apparel to Manhattan’s elite, Barneys New York will soon have a new owner.
On Thursday, bankruptcy judge Cecelia G. Morris approved a deal for Authentic Brands Group to purchase Barneys, a move that is expected to shutter all remaining stores and licence out the brand name to Saks Fifth Avenue. The sale officially closes on Friday, leaving a small window for another party to outbid ABG.
The luxury department store – long heralded as a beacon of high style in New York City and a favourite among celebrities and fashionistas – had entertained several bids in an attempt to avoid liquidation after filing for Chapter 11 bankruptcy in August. The bankruptcy came after several quarters of sales woes thanks to increased competition from e-commerce, declining foot traffic, and skyrocketing rent prices.
Though Barneys had planned to retain its iconic Manhattan flagship location, under ABG ownership the store would also be closed. While Barneys’ downfall may seem like a surprise to some, this isn’t the first time the company has been on the brink of collapse – the department store also suffered a near fatal blow in the 1990s.
Though Barneys isn’t alone in its fight to stave off the retail apocalypse, the brand has larger reputational issues on its hands, according to New York Times fashion critic Vanessa Friedman. Somewhere along the way, Barneys went from aspirational to punishingly elitist – it failed to adapt to the modern shopper, and in turn consumer sentiment soured.
“[Barneys] was also unabashedly elitist, proudly exclusionary – you got it or you didn’t, and if you didn’t, that was your problem, not theirs – and imbued with an arrogance that, at a certain point, began to chafe,” Friedman wrote after the bankruptcy announcement.
Here’s a closer look at the rise and fall of Barneys New York.
Barneys was started by Barney Pressman in New York City in 1923.
The first Barneys was a 500-square-foot men’s discount clothing store situated on Seventh Avenue and 17th Street. In order to fund his new venture, Pressman sold his wife’s engagement ring for cash.
Over the next decade, Pressman focused on gaining customers with the help of witty ads. In the 1930s, his store became the first Manhattan clothing company to use radio and television advertising.
The popular “Calling All Men to Barney’s” campaign aired right before the Dick Tracy radio show. Pressman was also fond of stunts like positioning women in barrels outside of bars to hand out Barneys matchbooks.
For the next three decades, Barneys remained a go-to destination for menswear. It wasn’t until Pressman’s son Fred inherited the business that the store made its transition into luxury retail.
Fred recruited the help of fashion designers Hubert de Givenchy and Pierre Cardin to infuse the store with European luxury fashion and establish Barneys as a destination for men’s designer clothing.
By the 1970s, Barneys was a full-fledged high-end retailer. Hoping to garner more business, Fred’s sons Gene and Bob took on the task of bringing women’s designer clothing to the store.
As Barneys established its dominance in the luxury fashion market, it helped launch the career of designers like Giorgio Armani. In 1976, the store officially debuted the Armani brand.
In the 1980s, Barneys commissioned Ivan Chermayeff to create an official logo, which the store still uses today.
In 1986, Barneys ran a series of high-fashion magazine ads featuring then-budding supermodels, Linda Evangelista, Naomi Campbell, and Christy Turlington.
That same year, Barneys opened its first official women’s store, to significant fanfare.
The store, which was located on 17th Street, became a popular destination for New York’s most stylish women. Like the Barneys we know today, it included a restaurant and a hair salon, as well as a comprehensive assortment of designers.
Also in 1986, Barneys hired Simon Doonan, the brainchild of the store’s iconic window displays. He remains creative-ambassador-at-large today.
By the 1990s, Barneys was ready for global expansion and the retailer began opening stores across the country, as well as in Japan. In 1993, Barney’s opened its lavish 230,000-square-foot flagship location on Madison Avenue.
The flagship was a reflection of Barneys’ quest to be an exclusive store for the upper echelons of society. According to New York Times fashion critic Vanessa Friedman, the 1993 opening was an “extravagantly unmistakable symbol of that separateness and that aspiration: the largest new specialty store to be built in Manhattan since the Depression, and one that broke all the rules.”
Moving into the early aughts, the company opened stores in Boston, Dallas, Scottsdale, San Francisco, and Las Vegas.
However, the 1990s also marked the beginning of a period of financial strife for Barneys.
Despite the opening of the flagship, Barneys closed a store in Cleveland and stirred up controversy when its Dallas salon refused to do “big hair” styles.
Source: Funding Universe
Around this time, Barneys also opened its first physical Warehouse location, a sign that the company had finally acquiesced to growing consumer demand for bargain goods.
The brick-and-mortar store built upon the semi-annual sales Barneys first began holding in 1971.
By the mid-1990s, several vendors began to refuse to sell to Barneys due to late payments. The Pressman brothers came under immense pressure from their Japanese financial partner, Isetan, Co, to pay their debts.
Source: New York Times
Though the Pressman brothers continued to hold soirees and celebrate the store, behind the scenes the business was increasingly struggling.
According to the New York Times, the Pressmans continued to tell everyone “business is great” at a Christmas party in 1995, when the reality was that they had made the decision to file for Chapter 11 bankruptcy.
“What the Pressman brothers didn’t share over the canapes and sparkling water was that just days earlier, they, along with other family members who serve on the board, had passed a resolution to put the company into bankruptcy, if needed,” New York Times writers Stephanie Strom and Jennifer Steinhauer wrote in 1996.
As part of the bankruptcy proceedings, Isetan took ownership of the three largest Barneys locations, in New York, Chicago, and Beverly Hills.
Isetan also closed the original Barneys store and shuttered locations in Houston, Dallas, and Troy, Michigan.
Source: Funding Universe
As Barneys worked to regain its financial footing, it made several high-profile appearances in hit shows like “Sex and the City” and “Will and Grace.”
It also went through a period of ownership and leadership transitions.
The company passed through several hands – when the Dubai private-equity firm Istithmar took control, CEO Howard Socol stepped down leaving a vacancy that went unfilled for two years.
In September 2010 Mark Lee was appointed CEO, and he got to work to try to usher in a new era for Barneys.
Under Lee’s tutelage, Barneys began experimenting with new retail concepts and partnerships, including teaming with Lady Gaga on the highly anticipated “Gaga’s Workshop.”
Gaga’s Workshop opened in November 2011 just in time for the holiday season, and it included limited-edition products as well as events and performances across New York City.
Despite these flashy partnerships, Barneys struggled with its identify as consumers not only began to sour on its elite image, but also to shop increasing online.
Still, “Barneys has cultivated a vaunted status as the place to see and be seen,” wrote New York Times writer Gregory Schmidt.
“Designers are willing to cut exclusive deals just to hang their clothes on Barneys racks,” he wrote. “The rarefied air draws celebrities looking to buy avant-garde fashion or to introduce their own.”
In 2017, Daniella Vitale took over as CEO after first spearheading significant growth within Barneys’ e-commerce sector.
Since taking the helm, Vitale has continued to fight an uphill battle for the struggling retailer.
Barneys continued to falter as a result of lost foot traffic, skyrocketing rent, and competition from e-commerce. In August 2019, the luxury retailer filed for Chapter 11 bankruptcy.
The company also announced it would close 15 of its 22 stores as it worked on restructuring and refinancing the beleaguered brand.
Source: Business Insider
On Thursday, bankruptcy judge Cecelia G. Morris approved a deal for Authentic Brands Group to purchase Barneys, part of a deal that is expected to close all remaining stores.
Though Barneys would be no longer, its brand name would live on after being licensed to Saks Fifth Avenue.