American Retailer Barneys Files For Bankruptcy, Will Be Shutting Down In Multiple Locationsby | August 07, 2019
Amidst a month of speculation that bordered on a 'will they, won't they' quandary, Barneys has confirmed to filing for bankruptcy. The American luxury department store's filing for Chapter 11 bankruptcy protection is reportedly a rent hike of its Madison Avenue flagship store, their most popular location inaugurated in 1993.
The increased rent is estimated to be $44 million and has set Barneys back in profits, causing the retailer to shut down in 15 locations. As of now, seven stores and two warehouses will be functional, including the one on Madison Avenue, with management looking to secure investors at the earliest.
The move will certainly impact employment, adding to the slew of jobs that bankruptcies have impacted this year in the United States Of America, a staggering 40 percent higher than in 2018. Reports suggest that up to 2,300 Barneys employees could lose their jobs when multiple store locations are discontinued.
Daniella Vitale, who took over as President and CEO in February 2017, shared a statement. Here's what it said:
"For more than 90 years, Barneys New York has been an iconic luxury specialty retailer, renowned for its edit, strong point of view, creativity and representation of the world’s best designers and brands. 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 courtsupervised process, which will provide the Company the necessary tools to conduct a sale process, review our current leases and optimize our operations. While doing that we are receiving new capital to help support the business. Pursuing a sale under the Court’s supervision provides the quickest and most efficient means of maximizing value while ensuring we continue serving both new and loyal customers."
"I would like to express my deep appreciation and profound gratitude for the continued support of our employees, vendor community and customers – truly the lifeblood of Barneys New York. Our decades-long partnerships and relationships will continue for many years to come. We are unwavering in our commitment to executing our forward-thinking vision on what retail should look like today."
The shift in shopping trends, which is attributed to more and more consumers favouring e-commerce over the years, has been of little help to the luxury store which was founded by Barney Pressmen in 1923.
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