Barneys’ flagship Madison Avenue spot will stay open — but with a smaller footprint

Authentic Brands Group and a partner got the OK to buy Barneys on Thursday

Nov.November 01, 2019 02:37 PM
Barney's at 660 Madison Avenue with Ashkenazy Acquisition Corporation's Daniel Levy (Credit: Getty Images, LinkedIn)

Barney’s at 660 Madison Avenue with Ashkenazy Acquisition Corporation’s Daniel Levy (Credit: Getty Images, LinkedIn)

Barneys New York’s iconic location on Madison Avenue will stay open for at least the next 12 months — though on a shrunken scale.

Ashkenazy Acquisition Corporation, which co-owns 660 Madison Avenue, struck a deal with Barneys’ new owner to keep the flagship property operating, the landlord’s president Daniel Levy said in a statement Thursday.

But Barneys, which occupies 275,000 square feet, will now stay open in a “smaller footprint.” Freds, the restaurant housed within the property, will also stay open.
Rick Chesley, the attorney for new owner Authentic Brands Group, confirmed the agreement. He said details regarding the size of the reduced space have yet to be worked out, and he declined to provide the rent.

Barneys and its attorney did not immediately respond to a request for comment.

The news came a day after a judge gave the OK for ABG and B. Riley Financial to close on the acquisition of the ailing luxury retailer for about $270 million. The move is widely expected to lead to the closure of most, if not all, of Barneys’ outposts across the country. Another location in Boston may stay open.

Levy said in a statement that the company was “disappointed” and had worked with Barneys’ prospective buyers to preserve operations at Ashkenazy Acquisition’s properties. The Barneys locations in New York and Los Angeles, “produce approximately $20 million and $30 million, respectively, in profitability for Barneys per year — even after the recent rent resets at both locations.”

Barneys filed for Chapter 11 bankruptcy in August, in part because of large rent increases. Ashkenazy roughly doubled the retailer’s annual rent at the Madison Avenue location this year to $30 million.

Barneys had already said in its filings that it planned to close most of its 22 locations, and before the bankruptcy it had been reported that it was looking to reduce its footprint at the Madison Avenue store — a report the retailer later refuted. But the company had hoped that other bidders would swoop in last minute to prevent ABG’s stalking horse bid from going through and shuttering all its stores.

As part of the acquisition, ABG will license Barneys’ name for use in Saks Fifth Avenue stores. ABG said it would turn the Madison Avenue Barneys location into a “pop-up retail experience” and that Freds would become a luxury eatery around the world, according to Business of Fashion.

The deal officially closed Friday morning, after no other bids surfaced, and after Barneys CEO Daniella Vitale stepped down, according to a memo obtained by BoF.

At least three groups had been working to craft deals to buy Barneys instead. For instance, Kith investor Sam Ben-Avraham had widely been expected to put forth a revised offer that would have attempted to save the stores from shuttering.

In an Instagram post Friday, Ben-Avraham wrote that he had chosen to drop out of negotiations.

“Unfortunately, we failed to convince enough people in the business community that it made economic sense to keep Barneys alive,” he wrote.

Write to Mary Diduch at [email protected].

Update: This story was updated to include further details about ABG’s plans for Barneys.

Related Articles

Macy’s Herald Square (Credit: iStock)

Macy’s new skyscraper missing one key thing

Simon Property Group CEO David Simon and Brookfield Property Partners CEO Brian Kingston (Credit: Getty Images)

Done deal: Forever 21 sold to Simon, Brookfield venture for $81M

Forever 21 cancels auction (Credit: Getty Images)

Forget the Forever 21 auction: Simon Property Group, Brookfield to buy retailer

The Strand at 828 Broadway and Book Culture at 450 Columbus Avenue (Credit: Wikipedia, Google Maps)

Strand to take over former Book Culture location on UWS

Macy's CEO Jeff Gennette and the Herald Square location (Credit: Getty Images and Google Maps)

Macy’s to close 125 stores, slash 2K jobs

Simon Property CEO David Simon and Forever 21 (Credit: Getty Images)

Forever 21 takeover group plans to keep struggling retailer open

From left: Authentic Brands Group CEO Jamie Salter, Simon Property Group CEO David Simon, and Forever 21 CEO Do Won Chang (Credit: Getty Images)

Forever 21 will sell to Simon, Brookfield-led partnership at bargain-basement price

Forever 21 CEO Do Won Chang (Credit: Getty Images)

Bankrupt Forever 21 seeks auction with hopes of keeping business alive