Leaked memo from Barneys CEO says there's only a 'small chance' the company gets saved
- In a leaked memo, Barneys CEO Daniella Vitale confirmed to employees that the bankruptcy court has approved Barneys' sale to Authentic Brands Groups, a move that would effectively shutter all Barneys stores.
- Vitale said that while there's a limited window of time for a bidder to rise up and reach an "alternative solution" that would prevent liquidation, the chance of that happening is "small."
- "We have all worked very hard to avoid this outcome," Vitale said in the memo. "I understand this has been a long and uncertain process, and I want to thank you all for your focus and dedication to keeping Barneys moving forward."
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As Barneys awaits finalization of its sale to Authentic Brands Group, Barneys CEO Daniella Vitale said in a leaked internal memo that the iconic department store is likely in its final days.
In the letter from Vitale to employees obtained by Business Insider, Vitale confirmed the court had approved a deal with ABG in partnership with Saks Fifth Avenue, which will be final as of 10 a.m. on Friday.
While that leaves a limited window of time for another bidder to step up and prevent the liquidation of the remaining stores, she said the likelihood of that happening is "small."
"Importantly, there is still a small chance that we will receive another offer before tomorrow's closing at 10 a.m. and we continue to work towards an alternative solution," Vitale wrote. "We will share final communication on this tomorrow."
Barneys entertained several interested buyers in the weeks after it filed for Chapter 11 bankruptcy protection in August, including Kith cofounder and owner Sam Ben-Avraham. While ABG has a track record of revitalizing beleaguered brands like Aeropostale and Juicy Couture, the parameters of the deal as it stands would involve shuttering the existing Barneys stores and licensing the brand name to Saks Fifth Avenue.
Barneys has already closed 15 of its 22 physical store locations, leaving seven remaining, including its New York City flagship store. Shuttering the remaining stores could cost the job of more than 2,000 employees the Wall Street Journal reported.
"We have all worked very hard to avoid this outcome," Vitale said in the memo. "I understand this has been a long and uncertain process, and I want to thank you all for your focus and dedication to keeping Barneys moving forward."
A spokesperson for Barneys did not immediately return Business Insider's request for additional comment on the memo but confirmed the deal's approval earlier on Thursday.
"Earlier today, the court approved the sale of Barneys New York to Authentic Brands Group, in partnership with Saks," a spokesperson previously told Business Insider. "Importantly, the sale has not concluded and other bidders can still come forward before tomorrow's closing. Over the past several months, we have worked diligently with the court, our lenders and creditors to maximize the value of Barneys in this sale process, and we continue to work with all relevant parties towards the best solution for Barneys' employees, designers and vendors, and customers."
Here's the full memo:
Dear Barneys New York Team Members:
As I have committed to keeping you updated on the sale process, I wanted to let you know that the court has approved the sale of Barneys New York to Authentic Brands Group, in partnership with Saks.
Importantly, there is still a small chance that we will receive another offer before tomorrow's closing at 10 a.m. and we continue to work towards an alternative solution. We will share final communication on this tomorrow.
We have all worked very hard to avoid this outcome. I understand this has been a long and uncertain process, and I want to thank you all for your focus and dedication to keeping Barneys moving forward.
Sincerely,
Daniella Vitale