WHAT’S NEXT FOR BARNEYS?
Byline: Vicki M. Young
NEW YORK — The changes at Harvey Nichols should provide some clues to the tough regime ahead for the new Barneys if it’s taken over by Dickson Concepts Ltd., according to retail analysts and trade executives in Hong Kong and London familiar with Dickson’s operations.
Barneys is viewed by industry and investment sources as an “artistic success but a financial flop,” as articulated by Laurence C. Leeds Jr., of Buckingham Research.
Although experts agree that Dickson is the best news for Barneys’ bottom line, they note that Dickson’s bottom-line focus and likely cost-cutting measures might stifle the creativity that has helped shape Barneys’ image.
Sources said that a turnaround at Barneys, a multiple-store operation that needs overhauling on the financial and management fronts, could take longer than Dickson Poon, Dickson’s chairman, would like. They also said that Dickson might cut expenditures on the creative front to speed up the improvement in Barneys’ profit picture.
Roberto Dominici, managing director at Hong Kong-based Joyce Boutique Holdings Inc., noted that while “Dickson Poon is very successful in retail management, he has never managed a multistore operation.” Dominici also noted that “Dickson Poon has never created a store concept.”
However, Leeds doesn’t think there is any need for concern.
“Dickson Poon’s no dope, and there are people with skills and talent who are available,” he said. “I would rather have the salvation of the business with a strong financial executive. If you lose money, that’s it, you go home.”
Asian executives, however, have said that the lack of creative experience is Dickson’s blind spot that could dull Barneys’ cutting-edge fashion focus.
Victoria Melendez, a retail analyst at Morgan Stanley in London, said the fast turnaround at Harvey Nichols was accomplished by an increase in the total retail space, a better sales mix and strict overhead controls.
London retail analysts note, however, that the increase in total retail space was accomplished by eliminating offices in the store and using “every square inch” to maximize selling space.
An Asian apparel executive said, “There’s a big question of how Dickson Poon would change Barneys, because everything Dickson’s organization does is aimed at maximizing sales without regard to esthetic layout.”
Trade sources who have described the Barneys store layout as uncluttered compared with other retailers’ note that an increase in merchandise concentration would run the risk of destroying the presentation that now fits the “innovative and avant-garde fashion image of Barneys.”
Another difference between Harvey Nichols and Barneys is that Barneys has only one leased department, the jewelry business, while Harvey Nichols gets 40 percent of its sales from lessees in London. In it Leeds store, Harvey Nichols gets 30 percent of it sales from leased departments, according to analysts.
Rent from the leased departments plus a percentage of sales gives Harvey Nichols a reliable stream of income. Harvey Nichols maintains tight overhead controls on the lessees, which they must meet if they want their leases renewed.
Adding to the creative question is the management depth of Dickson Concepts, which is concentrated on financial expertise. That concentration makes sense, said analysts, partly because Dickson’s finance group always does the turnarounds.
Because of the focus on finance, U.S. credit sources and vendors who ship to Barneys said that there is concern in the industry as to what the fashion direction will be under Dickson’s ownership.
Harvey Nichols doesn’t have a fashion director and doesn’t need one because the vendors who lease space are responsible for their own merchandise mix.
A trade source speculated that Gene Pressman, Barneys’ co-chairman, could fill that void because of his “strong merchandising talent.” Even if he takes on such a limited role, some in the industry were concerned that ego clashes would cut short any Gene Pressman/Dickson Poon arrangement.