After weeks of back and forth, bankrupt luxury retailer Barneys New York is expected to firm up a potential agreement with a stalking-horse bidder on Tuesday that could allow it to stave off a liquidation.
According to court filings on Thursday, Barneys was wrapping up talks with “multiple bidders” as it moves toward the later stages of discussions with a potential buyer. Then, on Friday, the high-end department store received an extended deadline that gave it until Tuesday to solidify a deal with one such bidder — although an Oct. 24 auction could reportedly shake things up.
Speculation about potential Barneys’ suitors has been heating up for weeks. New reports today suggest Authentic Brands Group has prepped a nearly $270 million bid after Liberty Fairs trade show owner Sam Ben-Avraham’s supposed offer broke down.
In a September interview with FN, ABG confirmed its interest in buying the beleaguered department store chain out of bankruptcy.
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“There is truth behind that; we are backing the new lenders,” ABG founder, chairman and CEO Jamie Salter said at the time. “They have a backup bid from us for the intellectual property, but we’ve got to wait until Oct. 24 and see who comes and who doesn’t come. Based on that, we’ll decide how far we play.”
ABG, which was named FN’s Company of the Year in 2018, already counts more than 50 brands across the fashion, lifestyle, sports, entertainment and media sectors — including Vince Camuto, Nine West, Frye and Aeropostale — and has been aggressive in the acquisition game.
“ABG has consistently proven an ability to see value through brands where others have not,” said William Susman, managing director at advisory firm Threadstone Partners. “The Barneys brand is synonymous with being fashion-forward; I can only imagine what ABG could do with this iconic name. They are a great buyer, and when they put their mind to it, usually successful.”
Now, ABG’s reported new offer, according to a Wall Street Journal report, would give it permission to license the Barneys New York name to fellow luxury retailer Saks Fifth Avenue, which is reportedly in talks to open Barneys departments in some of its stores and take over the Barneys website. ABG is also in discussions with Barneys landlords to keep some stores open, according to WSJ.
“Barneys has a lot of equity regardless of where it landed in its progression,” explained Farla Efros, president of consulting firm HRC Retail Advisory. “If it is to be sold, it will be worth more [as a whole] and allow for the ability to truly streamline, keep some flagship stores and focus on its exclusive customer-oriented brand.”
An assembly of fashion executives led by Ben-Avraham had also been pursuing a reportedly $220 million bid to take control of the department store chain. According to a WSJ report on Friday, other members of the group include Intermix founder Khajak Keledjian, Reformation founder Yael Aflalo, Theory co-founder Andrew Rosen as well as Ben-Avraham’s brother and Scoop co-founder Uzi Ben-Avraham.
Another report from FN sister publication WWD noted that factoring and finance company Hilldun Corp.’s CEO, Gary Wassner, was facing off with Ben-Avraham to snap up Barneys.
The storied retailer filed for Chapter 11 bankruptcy protection on Aug. 6, securing $218 million in financing that allowed it to continue operations. Barneys, a Manhattan mainstay for nearly a century, has struggled amid skyrocketing rents and shifting consumer demands that have weighed heavily on its margins.
Over the past month or so, it shuttered units in Las Vegas, Chicago and Seattle, and it closed some warehouse locations and smaller concept stores as part of its restructuring plan. The company received court approval to continue paying employee wages and honoring customer orders as it works toward meeting its financial commitments going forward.
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