Barneys New York may soon join the ever lengthening list of retail stores seeking protection in bankruptcy.
The luxury clothing company, faced with high rents and a shifting consumer landscape, is evaluating options that may include a bankruptcy, according to a source close to the matter who asked the Associated Press to remain anonymous because the discussions are confidential.
The company has nearly a dozen locations, mostly in the swankier districts in cities like Boston, Beverly Hills, California, and New York.
High-rent retailers like Barneys now compete with online luxury players like Net- a-Porter and the RealReal.com, which don’t have need to maintain flagship stores.
Barneys’ rent for its Manhattan showcase on Madison Avenue, for instance, will soon nearly double to $30 million after the retailer lost an arbitration decision that favored its landlord on Friday, according to the New York Post.
Reuters first reported Saturday that Barneys was evaluating bankruptcy options.
The rent hike alone nearly wipes out Barneys’ earnings before interest, taxes, depreciation and amortization, sources told CNBC earlier this year. The retailer has roughly $850 million in sales, the news outlet reported.
The department store chain last went into bankruptcy court in 1996, ultimately emerging with a much-reduced role for the founding Pressman family who had famously turned it into a snooty shopping brand in the 1980s and ’90s. The Pressman family sold their remaining stake in 1994 and control of the company has since been sold and resold to various private equity investors.
A second Barneys bankruptcy would only add to the retail industry’s carnage this year, with U.S. store closings stores opening. Last year, 5,864 stores closed and 3,258 opened.this year. Coresight Research pegs the count of retail outlets that have closed in 2019 so far at 7,062, versus 3,017
Beyond the shuttered facades lining main streets across the country, the human toll in terms of jobs lost is another impact. Challenger, Gray & Christmas counts 53,248 announced retail job cuts through June, compared to 98,563 for all of last year.