BARNEYS CO-OP’S NEXT PHASE
Byline: David Moin
NEW YORK — Barneys New York thinks its Co-op has legs.
Operating on the seventh and eighth floors of the Barneys Madison Avenue flagship, and in a freestanding format in Chelsea, Barneys is working to maintain the momentum on Co-op, its primary growth vehicle, opening a second freestanding Co-op in SoHo on Friday, and scouting several sites, primarily in the New York metropolitan area.
David New, executive vice president of creative services for the specialty chain, said the objective is to open two Co-ops annually over the next few years, ideally between 7,000 and 10,000 square feet each. Westchester, Connecticut and New Jersey, as well as Florida and Chicago, are being considered, with an eye to supplementing markets where Barneys has full-line flagships — Beverly Hills, Chicago and New York.
“For every full-line Barneys customer, there are a couple of hundred Co-op customers,” said Simon Doonan, creative director. “Despite all the vicissitudes, the Barneys name is hotter than ever. We’ve been on four episodes of “Will and Grace.””
Specifically, Barneys wants a third freestanding Co-op in Manhattan, and New mentioned that Melrose Avenue in Los Angeles would suit a Co-op. It’s likely that Barneys will look into The Mall at Short Hills in N.J.; The Westchester Mall in White Plains, N.Y., and Greenwich and Westport, Conn. Barneys, hurt by the recession like other retailers, needs greater volume to offset debt and raise profitability so its owners — the Whippoorwill and Bay Harbour vulture funds that plucked Barneys out of bankruptcy in 1999 — can sell the business and make some money.
Exactly how hot is the Co-op? According to Howard Socol, Barneys’ chairman and chief executive officer, the Chelsea unit at 236 West 18th Street exceeds $7 million in sales in its 7,000 square-feet-plus selling space, or about $1,000 a foot, and has been profitable since the first year. It opened in spring 2000. It would do even better, officials said, except it shuts down for a total of eight weeks to make way for the two annual Barneys warehouse sales.
Co-op sells such labels as Theory, Seven, MRS, Jeans, 2katayone, Marc by Marc Jacobs, Alabama, Earl Jeans, Three Dots, Alice & Oliva, Joie, Juicy, DVF, Julia, Magda Berliner, Olga Kapustina, Ulla Johnson, Diane Von Furstenberg, Kiehl’s, and Somme Institute. Prices are 30 to 50 percent below Barneys designer floors.
Socol expects the Co-op in SoHo at 116 Wooster Street (the former Prada Sport digs), with more than 7,000 square feet — including 6,500 for selling over two floors — to outperform the Chelsea unit, although the initial productivity goals are “conservative” at $800 to $900 in sales per square foot. He’s confident that business in SoHo, hurting since Sept. 11, will rebound. Also, the new store will only sell women’s merchandise, which turns faster than men’s. The first floor will house accessories, jewelry and cosmetics; the lower level, jeans, shoes and T-shirts. The Chelsea store carries men’s and women’s. However, construction costs were low on both locations, with Barneys able to create Co-ops by doing little more than applying paint and putting in fixtures, helping achieve profitability. Future sites, they acknowledged, will run up more expenses, but the company won’t fall prey to the pitfalls of past expansions, which drove the chain into bankruptcy from January 1996 to January 1999. “The potential pitfalls are very apparent to us now,” Doonan said. “Mr. Socol knows a thing or two about expansions.”
Last summer, Barneys came close to signing a lease for a full-line store in San Francisco, on Market Street, and conducted due diligence on the site, but Barneys decided it needed a more financially favorable real estate deal and the San Francisco economy wasn’t strong enough, so it nixed the project. At present, chances of another Barneys full-line flagship in San Francisco or elsewhere seem remote, but not beyond the realm of possibility. “We would be willing to do that, if we find the right real estate,” New said.