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.