• by Thom Forbes , October 15, 2019

If all goes according to one current plan for survival after bankruptcy, Barneys New York may be acquired by Authentic Brands Group, with the brand licensed to Saks and sold in Barneys departments in selected stores, as well in some of its own remaining retail locations.

Authentic Brands, which owns 50 diverse brands  including Nine West, Aéropostale, Hickey Freeman, Marilyn Monroe and Sports Illustrated, is preparing a nearly $270 million bid for Barneys after a potential deal  led by retail entrepreneur Sam Ben-Avraham failed to materialize last week (although Reuters indicates that it may still in the works). 

“Authentic Brands’ offer for Barneys calls for a handful of its storied brick-and-mortar outposts to remain open, potentially including its flagship Madison Avenue store in Manhattan and its Beverly Hills, California, location,” sources tell  Reuters’ Jessica DiNapoli and Mike Spector.

“Whether the existing retail locations remain open will depend on negotiations with landlords, they said. Barneys currently has seven physical retail locations remaining.

“As part of the Authentic Brands deal, it will license the Barneys name to Hudson’s Bay Co., the owner of luxury department store chain Saks Fifth Avenue, the sources said. The agreement would also allow Hudson’s Bay to operate the Barneys website, one of the sources said,” DiNapoli and Spector continue.

“The size of the Barneys mini-stores could be between 10,000 and 50,000 square feet, said a source with knowledge of the situation,” Lisa Fickenscher writes  for the New York Post.

“ABG is also in negotiations with Barneys’ landlord, Ashkenazy Acquisition, to keep open its stores in Beverly Hills and its Madison Avenue flagship, where its rent more than doubled this year -- triggering its bankruptcy, this person said. The branding company, which owns Juicy Couture and Frederick’s of Hollywood brands, is also talking with Barneys’ Boston landlord Simon properties to keep that store open, this person added.

“Any deal to save the Madison Avenue location would require Barneys to give up as many as six of its 10 floors, this person said,” Fickenscher adds.

“Barneys has been trying to stave off liquidation since it filed for bankruptcy protection in August. At a bankruptcy-court hearing on Friday, a Barneys lawyer said the company needed more time to firm up a potential deal with a lead bidder that would keep the luxury retail chain alive. The new deadline to clinch that offer was set for Tuesday,” Suzanne Kapner and Juliet Chung report  for The Wall Street Journal. 

They also report Authentic Brands’ interest, citing “people familiar with the situation,” while  writing that “Ben-Avraham said his group had lined up commitments for a loan, but had fallen short in securing the equity it was seeking. ‘People are saying retail is over,’ he said of the difficulty the group had in trying to get others to invest,” they write.

“We are encouraged by the strong buyer interest and recognition of the value in the Barneys assets and brand name,” Barneys CEO Daniella Vitale says in a statement.

But “any bid approved on Tuesday could still be topped in a bankruptcy auction later this month,” Kapner and Chung point out.

Gary Wassner, chief executive officer of Hilldun Corp., whose company provides financing to the fashion industry, also said he’s negotiating to salvage the company, Bloomberg’s Lauren Coleman-Lochner writes.

“I’ve been looking at every conceivable option for the company and brand, and speaking with many of the various interested parties,” Wassner tells Coleman-Lochner in an email. “I’d like to play a part in saving the brand and some brick-and-mortar version of it, in some capacity,” he says, adding that Barneys remains relevant with a unique voice. 

“The fashion world and the consumer needs it, but it has to be dramatically transformed,” Wassner says. “If it liquidates entirely it will be missed.”