Barneys’ Las Vegas store to close as company seeks bankruptcy protection
Barneys New York will no longer line the halls of the Grand Canal Shoppes at The Venetian.
The luxury retailer announced Tuesday it would shutter its 85,000-square-foot anchor location at the upscale shopping center after filing for Chapter 11 bankruptcy protection in the Southern District of New York. It didn’t say when the store will close.
The 96-year-old retailer was able to secure $75 million in financing for operational costs and paying creditors as it looks for a buyer, but it plans to close more than half of its locations.
Out of its 22 brick-and-mortar and warehouse stores, Barneys said it would shut down 15 locations, including the Las Vegas store and those in Chicago and Seattle. Its 10-story Madison Avenue store will remain open as well as stores in Boston, Beverly Hills and San Francisco and two warehouse locations in New York and California.
“Like many in our industry, Barneys New York’s financial position has been dramatically impacted by the challenging retail environment and rent structures that are excessively high relative to market demand,” Daniella Vitale, Barneys chief executive and president, said in a statement.
The chapter 11 filing said a shift in consumer spending habits from brick-and-mortar to online coupled with more than $10 million in rent increases on an annualized basis “severely decreased” Barneys’ pre-tax earnings and “significantly constrained liquidity.”
Barneys’ woes took the spotlight several months ago when the rent at its Madison Avenue location nearly doubled to $30 million. It fought the increase but lost during arbitration earlier this year.
The retailer, controlled by New York-based hedge fund Perry Capital, listed more than $100 million in assets and more than $100 million in debts. With more than 5,000 creditors, its largest include real estate investment firm Jenel Management and fashion labels The Row, Prada, Gucci and Chanel.
Barneys opened its doors at Grand Canal Shoppes more than 10 years ago. At the time, the Palazzo’s developer, Las Vegas Sands Corp., extended the canal in the nearby Venetian shops up to the store, which Grand Canal Shoppes bills as its “anchor store” on its website.
It’s unclear what will happen to the space once Barneys bids farewell to Las Vegas. A spokeswoman for Grand Canal Shoppes declined to comment. Chicago-based Brookfield Properties operates the mall.
Barneys joins a growing list of major retailers such as Macy’s and J.C. Penney Co. that have struggled to remain in business.
The number of retail stores closed in the U.S. this year has already surpassed the total number in 2018, according to Coresight Research, which expects 12,000 will be shuttered in 2019. Coresight said 7,567 retail stores have closed this year, compared with 5,864 in all of 2018.
Others are struggling to boost sales with Nordstrom reporting slowing sales and Neiman Marcus Group, which also operates Bergdorf Goodman, reporting a 1.5 percent decline in same-store sales and a more than 9 percent drop in revenue to $1.05 billion in the latest quarter compared with a year earlier.
Barneys’ roots date back to 1923, when Barney Pressman pawned his wife’s engagement ring and used the cash to open a 500 square foot men’s discount clothing store on Seventh Avenue and 17th Street in Manhattan.
His son shifted the company’s focus to luxury clothing in the 1960s and it began to expand nationwide in the 1990s.
The company’s crown jewel, its Madison Avenue location, opened in 1993, two years before Amazon initiated operations as an online bookstore.
The Review-Journal is owned by the family of Las Vegas Sands Corp. Chairman and CEO Sheldon Adelson. Las Vegas Sands Corp. operates The Venetian and Palazzo.
Contact Subrina Hudson at shudson@reviewjournal.com or 702-383-0340. Follow @SubrinaH on Twitter. The Associated Press contributed to this report.