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Barneys Looking Better in Tough Times

Barneys New York reported estimated results for the fiscal year ended Feb. 1 showed improvement in both the top and bottom lines.

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Barneys’ chairman and ceo Howard Socol is leading the store’s rebound.

WWD Staff

NEW YORK — Barneys New York may be in a quiet period due to a $90 million private placement for senior secured notes, but the store actually has something to crow about.

On Monday, the luxury specialty chain reported estimated results for the fiscal year ended Feb. 1 showing improvement in both the top and bottom lines, despite plummeting consumer confidence and the harsh environment throughout retailing.

Among the highlights in the preliminary report:

Net income of $7.5 million, compared with a $15.2 million loss the year before.

Operating earnings doubled to $29.7 million, from $14.5 million the year before.

Comparable-store sales gains of 2.9 percent.

Total sales of $383 million, versus $371.2 million in 2001.

While some of the gains were to be expected in light of the sharp declines right after the terrorist attacks on Sept. 11, 2001, Barneys has been cutting costs, watching expenses and renovating much of its selling space to increase productivity in best-selling, higher-margin categories, such as shoes, accessories, private label and contemporary sportswear. It’s also been managing inventories better, and last year negotiated more favorable rents.

The yearend results were contained in documents filed with the Securities and Exchange Commission due to the private placement. Final audited figures should be released in about four or five weeks.

Selling, general and administrative expenses, including occupancy costs, came to $154.3 million last year. Cash on hand came to $4.5 million. The company also showed capital expenditures of $11.4 million, involving renovations. Interest and financing, net of interest income, came to $11.2 million.

Funds from the private placement, in the form of $90 million in senior notes due 2008, will be used to cover debt, roughly $75 million that comes due in 2004, as well as deferred lease obligations.

Barneys officials were not able to comment on the results due to the private placement, yet the positive results should help the company raise the funds.

Fourth-quarter results alone have not yet been issued, but could be deduced by subtracting the previously announced results for the nine-month period from the full-year figures. For the nine months, comp sales increased 3.1 percent, totaling $277.4 million, which would put the fourth quarter at about $106 million in sales. Nine-month EBITDA came to $19.6 million, putting fourth-quarter EBITDA at $10.1 million, and net income was $2.9 million, putting fourth-quarter net at $4.6 million.

This story first appeared in the March 4, 2003 issue of WWD.  Subscribe Today.

Eventually, the primary owners, Whippoorwill and Bay Harbour Management, two investment funds that bought Barneys out of bankruptcy in January 1999, hope to sell the chain and the latest results should help their case, although any sale might prove difficult given Barneys’ narrow market appeal as a luxury fashion store focused on designer goods. Barneys operates flagships on Madison Avenue, in Chicago and Beverly Hills, as well as three smaller stores in Manhasset, Long Island, Chestnut Hill, Mass., and Seattle. The chain also operates two co-op stores, in SoHo and Chelsea, 12 outlets and two semiannual warehouse sale events.

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