Authentic Brands Group is taking a multipronged approach to the Barneys New York business — the licensing company last month finalized its $271 million deal to buy the retailer out of bankruptcy — and while there are still many moving parts, some ideas are beginning to take shape. ABG is looking to monetize its investment overseas, and for partners to power the concept it installs at Barneys’ former Madison Avenue flagship through February.
ABG plans to exploit Barneys’ international recognition in East Asia, including Japan, where it’s retaining 12 stores through an existing partnership. The licensing company is said to be focusing on countries where it already does business and has people on the ground so that it can leverage its strengths. That includes Shanghai, where ABG has an office and sees opportunity, as well as Korea, where Barneys is well-known to customers. Barneys in 2018 signed a wholesale agreement with Boon the Shop to sell its private label at the edgy retailer. Boon the Shop operates a flagship in Cheongdam, and units in Gangnam, Centum City and Daegu New World. At the time of the Boon the Shop deal, Barneys was also eyeing distribution in China.
Shortly after acquiring Barneys, ABG’s chief executive officer Jamie Salter said he envisioned international distribution of branded private label merchandise created as a result of the intellectual property agreement.
Salter was seen in a video circulated in fashion and retail circles asking “fans,” “Where should we take Barneys next? To Russia? Should we take Barneys to Korea?” Industry sources said an international play would make sense, since the retailer is known in Japan and there’s demand for the nameplate overseas.
“We’re fairly confident that over the next couple years, Barneys will be much bigger than it is in its current state,” the ceo said. Other attractive markets include Turkey, Germany, the U.K. and the Middle East. There was something of an outcry within the fashion community to the video of Salter sitting in a sofa in what appeared to be his office. ABG’s plan of potentially opening 40 Barneys shop-in-shops in Saks Fifth Avenue locations, including up to a 50,000-square-foot Barneys inside the Saks flagship in Manhattan, all through an agreement with Hudson’s Bay Co., the parent company of Saks, sounded like a pale version of the trailblazing Barneys.
“I feel like they have got to try to sell [the name] to the Middle East,” said one retail expert. “The U.S. is not touching that watered-down nameplate. It’s all international. That, to me, it’s kind of like, yuk. The reason why is you see these guys [ABG] killing Barneys’ compelling story. They’re taking the heart out of fashion. Barneys was like a heart to fashion, and they’re kind of gutting it.”
However, according to another source, the shop-in-shops will continue Barneys’ legacy of introducing up-and-coming designers and giving them a chance. The shops could also contain merchandise in the vein of Barneys’ collaborations with designers and curated merchandise reflective of the Barneys aesthetic, while private label would be a small percentage of the assortment.
The licensing company has been reaching out to various entities that could potentially help it program the Madison Avenue space, which has been consolidated from about 275,000 square feet to 90,000 square feet. ABG will reveal a 12-month plan for the location in February. Freds restaurant, on the former flagship’s ninth floor, will be part of the experience, which may or may not feature Barneys-themed merchandise. According to sources, the Barneys New York name can’t be used for the nameplate of the space because Saks Fifth Avenue is ABG’s exclusive retail partner as far as Barneys is concerned, in the U.S. and Canada. If Saks is not involved in the flagship concept — and it isn’t believed to be — the Barneys logo can’t appear over the door of 660 Madision Avenue. On the other hand, a source said that Barneys’ private-label cashmere, for example, could theoretically be sold at Nordstrom since consumer products fall under a different agreement.
What becomes of Barneys’ former Madison Avenue flagship remains to be seen, but real estate brokers said leasing the space to a new retail tenant could be an uphill battle.
“The situation on Madison Avenue is complex,” said Stephen Stephanou, a principal of Crown Realty Services. “The uncertainty as to the long-term future of the Barneys space casts a shadow. While it’s true that there has been some good news with the new Balenciaga and Celine boutiques, retailers remain cautious just to the north because of this uncertainty. While rents have softened, there’s a sense that a better deal could be made in the near future.”
A landlord with property on Madison Avenue said 660 Madison owner Ashkenazy Acquisition Corp. has indicated that it won’t seek the $30 million annual rent that some experts believe was partly responsible for Barneys’ downward spiral. “They’ll find a tenant to lease it for a 20 percent increase,” he said.