Luxury department store Barneys New York is considering filing for bankruptcy, a plan of action that could take place as soon as this month. According to Reuters, the retailer is facing a money crunch brought on by a rent hike at its 660 Madison Avenue location in Manhattan. Rent leaped up from approximately $20 million in 2018 to $30 million in January 2019.
Barneys began battling with building owner Ashkenazy Acquisition over the looming price hike two years before the lease expired in 2019. At the time, the two companies were working with an arbitrator to determine a fair increase. The Madison Avenue store rakes in about one-third of the company’s annual sales so choosing to decamp isn’t necessarily the best solution. Filing for bankruptcy would be one way the company could find its way out of expensive leases
Bankruptcy is not certain however. The company has hired law firm Kirkland & Ellis and M-III Partners, a financial advisory firm, to explore all possible options including a sale or seeking further financing.
In a press statement, the company stated, “At Barneys New York, our customers remain our top priority and we are committed to providing them the excellent services, products, and experiences they have come to expect. We continue to work closely with all of our business partners to achieve the goals we’ve set together and maximize value. To that end, our board and management are actively evaluating opportunities to strengthen our balance sheet and ensure the sustainable, long-term growth and success of our business.”
Opened in 1923 by Barney Pressman, Barneys operate 28 locations nationally, including outlets and restaurant Freds, and takes in $850 million in sales annually.