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Though it denied any plans to downsize its Manhattan store in March, high rent prices and a shifting customer base are partly to blame for the store's recent struggles, sources told Reuters.
We visited Barneys' Manhattan flagship store to see why it's looking to restructure.
Bankruptcy isn't just for shoe stores and fast-fashion retailers - these day it's a luxury retail problem, too.
Barneys - the high-end department store known for its designer offerings - is reportedly considering bankruptcy among its options to restructure its business and avoid joining a growing graveyard of retail stores.
The New York-based retailer serves a clientele with an eye for luxury. It has just 28 stores located in hubs like Boston and Beverly Hills.
Barneys' Madison Avenue store accounts for about one-third of the company's revenue, The New York Times reported on Thursday. But with talks of the annual rent on the 275,000-square-foot store increasing from $16 million to $30 million, the store could become unsustainable.
"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," a Barneys spokesperson said in a statement to Business Insider.
"At the same time, we continue to evolve our strategy and business model for the benefit of all of our stakeholders through our forward-thinking and uniquely modern approach, as demonstrated by our announced store openings at American Dream in New Jersey and at Bal Harbour Shops in Miami Beach, our new store in Las Vegas, Freds at Barneys New York coming to Copley Place in Boston, the launch of our luxury cannabis lifestyle and wellness concept shop and various pop-up and vendor installation projects."
We visited the Barneys store on Madison Avenue to see why it might be the latest retailer to declare bankruptcy. We found that Barneys wasted valuable space in its showrooms with elaborate sitting areas and almost-empty racks.
We stopped by the Barneys flagship store off Madison Avenue in New York City.
The building has nine floors, excluding an entire floor of cosmetics. Needless to say, the building projected an air of grandeur even outside.
Once inside, we were enveloped in the magical world that only a luxury department store can create. The warm lighting, sweet aroma of perfume, and soft music made the massive store come alive.
The first floor was filled with men's clothes and accessories and some designer handbags. We found everything from shirts ...
... to socks, some of which were going for $85 a pair.
There were items displayed behind glass cases throughout the floor. We noticed this on other floors as well. This made the store appear more like a museum showcase than a place to go shopping.
We traveled down a wood-and-glass staircase to check out the cosmetics section.
We didn't find anything out of the ordinary here.
So we went upstairs to the floors with clothing. This was the most revealing part of the entire journey.
Almost every room was characterized by vast amounts of empty space with a few surrounding clothing racks. Each section was teeming with associates who flocked to every customer who walked by.
But overall, the store didn't appear busy enough to warrant that kind of staff presence.
The clothing itself was scant in most places. There were a few items on every designer rack.
Many of the floors also had large and luxurious sitting areas that took up massive amounts of space. Madison Avenue is considered prime New York real estate, so this allocation of space felt wasteful.
The prices in some of these sections were unsurprising for a designer department store. This floral sweater from Chloé was almost $1,500.
And this red dress was close to $600.
Despite the high prices and vast open space in the store, there was little to criticize when it came to creativity. This tire seat section looked like it could have been an installation at a museum.
We also found these special-edition Barneys New York "goth Crocs," some of which were going for nearly $90.
On another floor, we found this lips-shaped loveseat with ribber spikes protruding from the surface.
And we found these glass-enclosed golden handcuffs near the undergarments section.
The shoe section was massive overall. There were some cool designer sneakers that caught our eye.
Nothing about the clothing at Barneys was bland. These metallic puffer jackets were the perfect balance of retro and chic.
Barneys had clothing for every possible occasion. We found fur coats and shawls ...
... as well as bathing suits.
As we rode the escalator up the nine levels of the store, we couldn't believe the size of the property. Barneys also has a cafe in the building.
The top floor was by far the most whimsical. Here's where we found the home goods, artwork, and children's section.
There was a whole wall devoted to china for wedding registries.
A lot of the items we saw seemed to have little practical value, but they were fun to look at.
This section evoked the atmosphere of a museum more than anywhere else in the store.
They were even advertising a limited-edition signed book of the photographs of renowned photographer Annie Leibovitz. The book and tripod stand were going for $3,000.
After this final stop, we began the trek back downstairs. Once we were outside, it felt like we had just emerged from a different city. But outside, we were immediately confronted with the harsh reality of retail stores, especially on Madison Avenue.
A quick walk down the street revealed that the once-bustling avenue is not the top shopping destination it used to be.
Calvin Klein and Jonathan Adler are among the designer brands that have closed flagship stores on Madison Avenue recently. With empty storefronts becoming more common, it is no surprise that Barneys would consider all its options — including bankruptcy — if its rent goes up.
Overall, we found that Barneys wasted valuable space in its showrooms with elaborate sitting areas and nearly empty racks. If the rent of its massive property almost doubles — as it is expected to — Barneys could find itself in the same situation as many other retail stores that neighbor it.
