Barneys: How New York's temple of cool crumbled

Barneys, the luxury retailer and New York fashion institution, has filed for bankruptcy protection and announced it will close most of its stores in the US. The move, along with more than [$200 million in new capital]( it has secured, will keep the debt-laden company alive for now, and its glitzy Madison Avenue store and other flagships are safe. But it still has to work out a way to survive long-term as it struggles to keep up with changes reshaping retail, not to mention New York’s cutthroat real-estate market. If it can’t find a buyer by Oct. 24, 2019, it could be forced to liquidate. It would be a major loss to New York, and to fashion more broadly. Barneys was the first US store to buy a number of fashion legends before they were legends. It helped introduce Americans to designers such as Giorgio Armani, Miuccia Prada, Rei Kawakubo, and Dries Van Noten. It was different from other luxury shops: Where Bergdorf was stuffy, Barneys was cool. Since its early days in the 1920s as a cut-rate men’s store, it grew steadily, perhaps improbably, into a destination for fashion’s most devoted in Manhattan and beyond. Now, its future is in jeopardy. 🐦 [Tweet this!]( 🌐 [View this email on the web]( [Quartz Obsession] Barneys August 08, 2019 Chapter 11 comes a-calling --------------------------------------------------------------- Barneys, the luxury retailer and New York fashion institution, has filed for bankruptcy protection and announced it will close most of its stores in the US. The move, along with more than [$200 million in new capital]( it has secured, will keep the debt-laden company alive for now, and its glitzy Madison Avenue store and other flagships are safe. But it still has to work out a way to survive long-term as it struggles to keep up with changes reshaping retail, not to mention New York’s cutthroat real-estate market. If it can’t find a buyer by Oct. 24, 2019, it could be forced to liquidate. It would be a major loss to New York, and to fashion more broadly. Barneys was the first US store to buy a number of fashion legends before they were legends. It helped introduce Americans to designers such as Giorgio Armani, Miuccia Prada, Rei Kawakubo, and Dries Van Noten. It was different from other luxury shops: Where Bergdorf was stuffy, Barneys was cool. Since its early days in the 1920s as a cut-rate men’s store, it grew steadily, perhaps improbably, into a destination for fashion’s most devoted in Manhattan and beyond. Now, its future is in jeopardy. 🐦 [Tweet this!]( 🌐 [View this email on the web]( Reuters/Shannon Stapleton By the digits [$35 million:]( Barneys’s approximate revenue in 1975, the year founder and namesake Barney Pressman retired $800 million: Barneys’s approximate revenue in 2018, according to its bankruptcy filing $200 million: Approximate amount of debt Barneys holds, according to the same document [72:]( Percent increase for the rent at Barneys’s Madison Avenue flagship in New York this year, which helped push the company toward its chapter 11 claim [$27.9 million:]( Amount in monthly rent Barneys now pays on that location, up from $16.2 million [$540:]( Average purchase value at the company’s Madison Avenue flagship between February 2018 and May 2018 Charted[atlas_MF7xt8Y7T@2x] Sponsored by Finimize Feeling lucky? Enter to win a fancy Equinox membership. --------------------------------------------------------------- They say you can’t put a price tag on good health, but Quartz is teaming up with Finimize to do just that. We’re giving one lucky reader a free 12-month membership to luxury fitness club Equinox. The perks? Unlimited access to 100+ locations, steam rooms, and even eucalyptus towels. Oh, and the price tag? $4,000.[Enter here.]( Giphy Million-dollar question What brought Barneys to the brink? --------------------------------------------------------------- Barneys is grappling with some of the pressures facing department stores generally, but it isn’t exactly like the others. “Please don’t call us a department store,” Mark Lee, who was then CEO of Barneys, [told Fortune in 2016](. “We are truly a modern luxury specialty store selling at full price and not discounting every day, with a very differentiated point of view.” He has a point. The traditional department store like Macy’s or JCPenney aimed to be accessible and convenient for a wide swath of Americans, places for families to shop for clothes, appliances, and much else besides. Droves of them popped up to anchor malls sprouting across suburban America, which is part of what’s bringing them down as those malls wither. Barneys, however, focused on finding the very best luxury fashion around the world and delivering it to a small but passionate fanbase. Its store footprint reflected that strategy. Even today, it operates just 13 regular stores, targeting high-income urban shoppers, and nine of its off-price “Warehouse” stores. Still, the company hasn’t been able to escape the upheavals shaking up retail. Like others, it’s under pressure from online competitors. It has suffered, too, from brands doing more of their own retail sales, and even with the low store count, it still—like others—has too many unproductive spaces. Barneys has repeatedly tried expanding in markets that might not have the same appetite for cutting-edge, luxury fashion as New York or Los Angeles. The Scottsdale, Arizona, store it shuttered [in 2016]( comes to mind. Now it says it will close stores in cities including Las Vegas, Chicago, and Seattle. One of its biggest problems, though, is specific to the company. As Lauren Sherman at Business of Fashion [wrote last month]( “Instead of owning cool, Barneys began chasing it.” The retailer used to be the place to discover exciting new designs from emerging talents, and could always be counted on to offer something unexpected and different than other shops. For the past several years, though, critics have complained that Barneys has retreated from the cutting edge in favor of fashion that [is less distinct]( and can be purchased easily elsewhere. Perhaps it’s a result of that attempt to reach for a broader audience, but whatever the cause, if it survives, Barneys will need to find a reason for shoppers to again treat its stores and website as a vital destination. Quotable “It was kind of the sense that the customers were the enlightened New Yorkers. At the time, Bergdorf’s felt like a store for uptown doctors’ wives, and Barneys was where the cool people shopped, and the cultural elite. People in the know.” —[Ronnie Cooke Newhouse]( creative director of Barneys in the early 1990s Reuters/Shannon Stapleton Pop quiz In what decade did Barneys officially remove the apostrophe from its name? 1950s1960s1970s1980s Correct. Right! At the start of the decade, the possessive Barney’s became Barneys, which sounds like a plural of “Barney” but isn’t meant to be. Incorrect. Sorry, that’s incorrect. Your punishment is to figure out the possessive form of the apostrophe-less Barneys. If your inbox doesn’t support this quiz, find the solution at bottom of email. Have a friend who would enjoy our Obsession with Barneys? [ [Forward link to a friend](mailto:?subject=Thought you'd enjoy.&body=Read this Quartz Obsession email – to the email – Brief history Started at the bottom, now they're here --------------------------------------------------------------- For such an upscale store, Barneys has a decidedly downmarket origin story. Barney Pressman opened his business in 1923, in a small storefront on Seventh Avenue and 17th Street—an area that was all slaughterhouses and warehouses. But the [tale goes]( that Pressman’s wife urged him to pawn her engagement ring for the money they used to take over the store’s lease and stock it with suits that Pressman could sell at bargain prices. Pressman made it work with hustle. When he couldn’t convince leading suit makers to sell to him, for instance, he improvised. “He bought suits from stores in the South and then would replace the famous labels with his own,” Cathy Horyn wrote in a [2012 story for the New York Times](. “He sold thousands of bootleg suits.” It was Pressman’s son, Fred—born the same year the store opened—who would put Barneys on the course to success. In the 1960s and 1970s, while his competition was focused on American-made tailoring, Fred Pressman had his eye on Europe, where he discovered a still-unknown Italian named Giorgio Armani. In 1976, as Joshua Levine recounts in [The Rise and Fall of the House of Barneys]( he offered Armani $10,000 for exclusive rights to sell his clothes in New York. When Armani’s loose, unstructured suiting became a sensation, Barneys was the only place in the city to buy it. “That really changed the way Barneys was viewed,” Gene Pressman, Fred’s son, [told the Wall Street Journal]( in 2016. Gene and his brother, Bob, carried on the business with that ethos. In the late 1970s, Gene Pressman introduced womenswear to Barneys, and was soon bringing brands such as Alaïa, Prada, and Comme des Garçons to New Yorkers. By the 1990s, Barneys had become the place where fashion addicts made their seasonal pilgrimages to see what was exciting and innovative, browsing racks of labels such as Helmut Lang, Margiela, and Yohji Yamamoto. The store stood apart, and succeeded because of it. Then, in 1996, Barneys [declared bankruptcy](. Some years earlier, the company had linked up with a Japanese partner, Isetan, to help finance an expansion, trading its downtown digs in New York for a posh uptown address on Madison Avenue and opening new stores around the US and in Japan. But a dispute between Barneys and Isetan turned ugly, and Barneys, saying it couldn’t keep up with the new costs, filed for chapter 11 protection. The Pressmans ultimately [lost the store](. Barneys had seven stores and 13 outlets by that point, but the growth came with mixed success. Since, it has changed hands repeatedly, selling in 2004 to Jones Apparel Group, which then sold it a few years later to Istithmar, a private equity firm from Dubai. As it struggled, Istithmar installed a new CEO, Mark Lee, who previously ran Gucci and implemented changes in Barneys that made its stores sleek showcases for high-margin shoes and handbags but arguably sacrificed character. In 2012, Barneys’s largest lender, Perry Capital, bought the company in a bid to revitalize it that, at moments, even [seemed to be working](. It still owns Barneys, but may not for much longer. Giphy take me down this 🐰 hole! The biggest spenders at Barneys can drop more than $1 million a year on clothing, but they don’t do it alone. Superfans have in-store personal shoppers who help them cultivate a look and get access to the best pieces. They also sometimes become friends—Rihanna, a favorite customer—attended her in-store stylist’s wedding. Brandon Presser, a [former Barneys personal shopper, dishes on what the job entails for Bloomberg](. Fun fact! In 2002, Barneys bought the entire senior thesis collection of two students at New York’s Parsons New School for Design. It became the first collection of the label they launched, [Proenza Schouler](. Watch this! Don’t call it a department store --------------------------------------------------------------- Barneys isn’t simply a place to buy things. It’s a place to have your needs met, no matter how esoteric. To make this possible the store offers a concierge service that does everything from make dinner reservations to finding the best tailor in Zurich. And anyone who comes in Barneys can use the service, even if you’re just looking. Giphy Poll Is Barneys headed for the dustbin? [Click here to vote]( No, it’s come back from bankruptcy beforeYes, it lost the threadI don’t know, but if it does, the sale will be epic 💬let's talk! In yesterday’s poll about [Volkswagen Beetles]( 44% of you said your favorite thing about them, of course, is the “beetle-like body.” 📧 Daniel writes: “Being from Mexico City I can confirm the ubiquity of the ‘Vocho’ in the streets; an absolute icon here. The name Vocho, by the way, is a way of shortening and lightening the longer and more difficult word for Volkswagen.” 🤔 [What did you think of today’s email?](mailto:obsession%2Bfeedback@qz.com?cc=&subject=Thoughts%20about%20Barneys&body=) 💡 [What should we obsess over next?](mailto:obsession%2Bideas@qz.com?cc=&subject=Obsess%20over%20this%20next.&body=) 🎲 [Show me a random Obsession]( Today’s email was written by [Marc Bain]( edited by [Annaliese Griffin]( and produced by [Luiz Romero](. The correct answer to the quiz is 1980s. Enjoying the Quartz Obsession? 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