It’s a new day for Barneys New York.
While the luxury retailer failed in its 11th-hour scramble to line up a buyer to take the business as a going concern, the name — and perhaps some of its stores — live on under the ownership of Jamie Salter’s Authentic Brands Group.
Drawing to an end a saga that at times had more plot twists than “Game of Thrones,” with a bit of “Fantasy Island” thrown in, ABG ended up the winning bidder, as had appeared likely a month ago, buying the bankrupt company for $271 million. It plans to immediately start to reimagine the business — bringing the name to Saks Fifth Avenue, looking at oversees opportunities and converting the famed — and expensive — Madison Avenue flagship into a new, much smaller, pop-up shop concept.
ABG also proclaimed a bold vision for Barneys, including potentially opening more stores in the U.S. and even overseas.
All of that could rankle Barneys diehards — but change has nonetheless come to the quirky brand and once it was official, the pieces started dropping into place quickly.
Chief executive officer Daniella Vitale notified the staff via e-mail Friday that she had left the company, apologizing for “the difficulties that we caused” and noting “please know we did everything we could to avoid this situation and protect the Barneys brand.” The deal also cost Vitale a potential bonus — had the company been sold as a going concern, she would have received a portion of the sale price above a certain threshold.
While Barneys and others did everything they could to keep the existing business alive with vague plans, Salter, chairman and ceo of ABG, won with a clear-cut vision of what the new Barneys will look like.
The go-forward plan calls for bringing the Barneys brand inside all or most Saks Fifth Avenue stores and converting the current Barneys stores into an experiential luxury and entertainment play.
Barneys’ flagship on Madison Avenue as well as its four full-price stores in Los Angeles, Boston, San Francisco and downtown New York and two outlets will immediately start liquidation sales that will run through February. At that point, the Madison Avenue location will be downsized to four floors and transitioned into a “pop-up retail experience, bringing together an eclectic curation of boutiques, art and cultural installations and exhibits, and entertainment that fosters creativity and community,” ABG said.
Whether that location will still be called Barneys New York has yet to be determined.
What is certain is that ABG is partnering with Saks as Barneys’ exclusive retail and e-commerce partner in the U.S. and Canada. That includes the Barneys e-commerce site as well as its warehouse outlet store business. “The first order of business will be to reboot Barneys New York on the fifth floor of Saks Fifth Avenue’s newly renovated New York City flagship,” ABG said.
Salter said the Barneys footprint at the Saks flagship will be a whopping 50,000 square feet. However, sources close to the Saks-Barneys linkup told WWD that while there will definitely be a reboot of Barneys on the fifth floor of the store, where Saks currently sells contemporary designers and brands, it’s premature to suggest how big of a presence Barneys will actually have.
On Friday, Salter was enthusiastic and happy that the bankruptcy negotiations had finally come to a close.
“I feel like I won this race three times,” Salter said, referring to the weeks of back-and-forth negotiations the led to the final deal on Friday.
“Retail brands are tough and there are very few that are really brands,” he said when asked what appealed to him about Barneys. “When you look at it, you have to ask yourself, is it just a place that sells other people’s stuff? Barneys is a real brand with heritage that caters to a luxury customer, a Millennial customer. It’s a leader and a trendsetter, not a follower.”
He likened Barneys’ future opportunities to those of Sports Illustrated, which ABG purchased in May for $110 million. “We thought SI could be a lifestyle brand, not just a publishing company,” he said. “It’s an entertainment brand, an experiential brand, a merchandise brand.”
Ditto for Barneys, which he believes has the potential to live across “multiple categories and cultures” throughout the globe. “It’s known all over the world,” Salter said.
He pointed to the hard-fought battle to buy the brand as an example.
“Competing against Sam Ben-Avraham, we saw that he had so much passion to buy the brand. That proved that Barneys has a huge heartbeat.”
Ben-Avraham, the trade show operator and Kith investor, had worked for two months “around the clock” on an emotional #SaveBarneys campaign to try to arrange the financing necessary to buy the brand, he said in an e-mail revealing he was bowing out on Friday afternoon. “My team and I still feel very strongly about Barneys: what it stands for and what it could mean in the future. We believe it has its place in New York’s landscape and beyond,” he added. “Unfortunately, we failed to convince enough people in the business community that it made economic sense to keep Barneys alive.”
He added: “We understood from the beginning that looking at spreadsheets and numbers, it did not make sense but we saw a future beyond that. We knew that once we overcame that hurdle there would be light at the end of the tunnel. I apologize if I have failed anyone, and gave anyone false hope by not being able to close the deal.”
However, Salter sees a bright future for the brand, albeit in a completely different form.
“Retail is tough. If it wasn’t, we wouldn’t be in a position to buy Barneys,” he said. “But you will now see the Barneys name all over the world in multiple categories.”
He said this will include opening Barneys shops at department stores in locations as far-flung as London, Korea and Russia. In fact, he said “major luxury retailers” have already reached out to him to inquire about Barneys. He did not provide details. (ABG’s deal will maintain the current licensing agreement between Barneys New York and Seven & I Holdings, which operates 12 Barneys New York retail stores in Japan).
Salter said Ben-Avraham and he were “on the same path” when it came to their idea of what Barneys can look like. “Pop-ups work for a lot of people [to showcase] new brands and a store-within-a-store.” Successful retailers today look less like the traditional department store and more like a series of pop-ups, according to Salter.
With rare exceptions, the pop-ups will not house other ABG brands, he stressed, which range from Nine West and Juicy Couture to Frye and Frederick’s of Hollywood. “We’re not going to do a Marilyn Monroe pop-up,” he said of one of ABG’s marquee brands. But any ABG brands that are carried at Saks are a possibility.
Instead, Salter pointed to the reinvented Saks flagship as an example of successful experiential retailing.
Marc Metrick, president of Saks Fifth Avenue and one of the key architects of that retailer’s updated look, “is the boss” when it comes to creating the merchandising for the new Barneys concept, Salter said, noting Metrick is building his team internally and “where he has holes,” he will look to add talent as needed.
Saks and Barneys are only about 10 blocks apart in New York, but they will be different concepts.
On Friday afternoon, Daniel Levy, president of Ashkenazy Acquisition Corp., owner of the properties Barneys occupies on Madison Avenue and Beverly Hills, sent a letter saying his firm had reached a deal with ABG to keep the New York store open “in a smaller footprint for the next 12 months while we continue to explore longer-term solutions.” The Fred’s restaurant will remain open as well.
Salter said that deal is to keep “four floors to start and possibly more while we work on a new strategy.” He said reinventing Barneys is something he and his team have been working on since ABG started to look at buying the retailer several months ago.
“We’ll keep it open for at least a year, and maybe forever,” he said of the Madison Avenue store. “But we have to make sure it all works.”
Attracting traffic is paramount, he said, and that’s where experiences and rotating retail concepts come in. “It could be a David Bowie experience or other experiences that bring customers in,” he said. “It’s got to be more than, ‘Would you like to buy a handbag or a pair of shoes?’ You’ve got to give people a reason to get off the couch and come in.”
One thing that will undoubtedly attract traffic are the liquidation sales that will start immediately at the Barneys stores.
Salter called these “transition sales,” or “non-store-closing sales,” and they will run between now and February to clear the inventory. Salter said he doesn’t like the term “liquidation sales” because that implies that a store is “never coming back. And we’re going to be opening a 50,000-square-foot Barneys at Saks boutique.” He said that is expected to be open before March and will be “well stocked” when it makes its debut.
Nonetheless, the flood of discounted merchandise into key retail markets, especially New York and L.A., in the middle of the holiday selling season is likely to impact many of Barneys’ former competitors — including perhaps Saks, as well as Bergdorf Goodman and the newly arrived Neiman Marcus and Nordstrom in Manhattan.
There will also be a heavy marketing push to inform customers to travel the 10 blocks south to Saks for Barneys’ luxury merchandise. Salter said he hopes to roll out other Barneys boutiques at Saks as well next year, starting in major markets such as Los Angeles, Toronto and Las Vegas.
In Boston, he said the Barneys store will remain and he’s in negotiations with David Simon of Simon Property Group, which owns the Boston site, on what that location can look like after the “transition sales” have been completed. Simon and Salter are partners in an operating company called ARC, Authentic Retail Company, that operates Aéropostale and Nautica stores.
Salter said the Barneys store in Beverly Hills on Wilshire Boulevard is a “work in progress.” He said ABG couldn’t complete the negotiations on the lease before the deal closed and he’s still negotiating with Ashkenazy to decide the fate of that unit. “It’ll take a couple of weeks to figure out,” he said. “There are only a couple of years left on the lease.”
He envisions adding at least one other Barneys store in an upscale community such as Greenwich, Conn., or some other part of the U.S. that could support a luxury concept. “We’re in negotiations on that now.”
Barneys’ e-commerce site will also remain a “very important part of the business,” he said.
Shortly after Vitale’s exit was revealed, the Barneys Instagram account dispatched a somber photo of its shopping bag with a caption that seemed like a goodbye. “Sincerely, Barneys New York,” read the post, accompanied by a black heart emoji. Eulogies started rolling into the comments section below, with designers like Pamela Love and stylist Karla Welch expressing remorse.
But within an hour, the post was deleted and a new image that read “Barneys New York Forever,” was posted, with ABG’s own corporate account commenting two minutes later in solidarity, “Forever.”
But followers were not as charmed, with many catching on to the quick switch in tone. “Barneys Forever, ABG Never,” commented Nomia, a New York-based contemporary label that has been stocked at Barneys for the last few years.
“Barneys is Barneys because of its people, taste level, [and] fashion flare, that cannot be passed on. The Barneys name without its people [and] its stores is worthless. It becomes junk! It will only live forever to those of us that have lived it,” commented Angela Libani, a showroom owner.
As ABG, with the help of Saks, seeks to reestablish the beloved retail name, it will no doubt face other doubters.
For now, the sales are about to start.
“This is a once-in-a-lifetime opportunity for its most loyal customers to buy items that rarely go on sale at markdown prices,” said Scott Carpenter, president of retail solutions at Great American, which is handling the liquidation. “We encourage shoppers to visit their nearest Barneys location to take advantage of this sale before this highly exclusive merchandise sells out.”