Barneys appears to be headed to bankruptcy, although the retailer is still seeking alternatives to Chapter 11.
Here are seven pressing topics surrounding the struggling luxury department store business to be aware of:
- The business is raising funds for a bankruptcy filing that’s in the works, potentially arriving as early as next week, per sources familiar to the matter.
- Barneys is hoping to find ways to avoid bankruptcy, a topic that was brought about by higher rent costs in its Manhattan flagship store.
- This Madison Avenue location’s rent increased from around $16 million to about $30 million in January, almost eliminating the company’s EBITDA.
- The company is also facing steep real estate costs from its namesake stores, which are more than 10, and are located in New York, California, Chicago, Massachusetts, Las Vegas, Seattle and Pennsylvania.
- As far as options outside of bankruptcy go, it seems as if Barneys is running out of options–there were talks with a potential financing source that fell through Wednesday, per a person close to the matter.
- “We continue to work closely with all of our business partners to achieve the goals we’ve set together and maximize value,” a Barneys spokesperson said. “To that end, our Board and management are actively evaluating opportunities to strengthen our balance sheet and ensure the sustainable, long-term growth and success of our business.”
- The retailer has gotten the ball rolling to raise debtor-in-possession financing with the goal of supporting its business through bankruptcy, although the exact size of this financing is not set in stone at the moment.et Partners, has not been enough to siphon the losses.
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