- Former hedge-fund manager and chairman of Barney’s New York Richard Perry made mistakes that led to the famed department store’s financial troubles, the Wall Street Journal reported.
- Barney’s New York filed for bankruptcy on August 6 and put itself up for sale, according to Reuters.
- Perry’s own hedge fund, Perry Capital, shuttered in 2016 amid growing losses, The New York Times reported at the time.
- Visit Business Insider’s homepage for more stories.
The financial troubles of famed luxury department store Barney’s New York may not be just another tale of a brick and mortar retailer crushed by the rise of online shopping.
The leadership of billionaire former hedge fund manager Richard Perry may also be to blame, the Wall Street Journal reported on August 6. Perry, the former president of now-defunct hedge fund Perry Capital took control of Barneys in 2012 and Perry assumed the role of the chairman of the board.
Perry was once considered one of the hedge fund industry’s most successful investors, according to The New York Times. However, Perry closed the fund in 2016 after mounting losses cost him the trust of his investors, the Times reported at the time.
A representative for Perry did not immediately return Business Insider’s request for comment.
Keep reading to learn more about the rise and fall of former hedge fund manager Richard Perry.
Perry, 64, has an MBA from New York University’s Stern School of Business, according to Forbes.
Perry also earned a Bachelor’s degree from the University of Pennsylvania, according to Forbes.
Perry is married to fashion designer Lisa Perry. Barney’s sold her clothing line, according to the Wall Street Journal.
The couple owns a Manhattan penthouse, a house in the Hamptons, another house in Palm Beach, and a house in the French Riviera.
The couple’s Hamptons home features a wood-paneled library and an infinity pool, according to Architectural Digest. Their house in the French Riviera is inspired by the 1960s, according to Elle Magazine.
Perry’s wife Lisa wrote a book about the interiors of their homes, which she designed herself, according to Architectural Digest.
After a stint at Goldman Sachs’ risk-arbitrage desk, Perry cofounded Perry Capital in 1988 with former Harvard Management Co. portfolio manager Paul Leff.
At its 2007 peak, the hedge fund managed $US15 billion, the Journal reported on August 6.
The following year, Forbes estimated that Perry had a net worth of $US1.2 billion.
Activist investor Carl Icahn sued Perry’s hedge fund in 2004, accusing the hedge fund of manipulating share prices during Icahn’s takeover battles.
The suit was valued at over $US1 billion, according to the New York Times. Icahn alleged that Perry’s hedge fund manipulated the boards of several companies facing acquisition, including Compaq Computer before its merger with Hewlett-Packard between 2001 and 2002, the Times reported at the time.
The lawsuit was eventually dropped, according to Forbes.
Perry Capital took control of Barneys New York in 2012.
The hedge fund invested less than $US300 million in the luxury department store, according to the Wall Street Journal.
The Journal described Barney’s as Perry’s “passion project.” However, Perry’s spokesperson, Richard Edelman, told the Journal, “As Richard has done over the course of his career, he made the investment after significant diligence and determining it was a smart investment to make.”
Perry served as the chairman of Barney’s board, and made mistakes that contributed to the store’s financial troubles, the Wall Street Journal reported.
Perry underestimated the threat e-commerce posed to Barneys, the Journal reported, and put too much emphasis on the chain’s brick and mortar locations.
Perry also was unable to negotiate the department store out of a substantial rent increase, according to the Journal.
However, Perry did close some unprofitable stores and reduce customer’s shipping and returns costs during his tenure, according to the Journal.
Perry Capital shut down in 2016, after several years of steep losses.
The hedge fund lost more than 12% of its investors’ money, causing clients to pull out, according to The New York Times. While Perry Capital stopped managing money for the public, it did retain some investments – including its stake in Barneys, according to the Journal.
“The industry and market headwinds against us have been strong, and the timing for success in our positions too unpredictable,” Perry wrote in a September 2016 letterannouncing the closure to investors, according to The New York Times.
On August 6, 2019, Barney’s filed for bankruptcy.
The retailer cited slowing sales and rising rents as the source of its financial problems, Business Insider previously reported.
“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,” CEO Daniella Vitale said in a statement. “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 optimise our operations.”
While the Manhattan location will remain open, Barney’s will close 15 of its 22 stores and put itself up for sale.