Barneys filed for bankruptcy last month

Barneys filed for bankruptcy last month

Troubled US luxury department store retailer Barneys New York has reportedly secured court approval for financing, allowing it to begin looking for a buyer, while moving to assure customers it is still open for business.

The retailer announced plans early last month to close a raft of stores in Chicago, Las Vegas and Seattle, and seven warehouse locations, after filing for Chapter 11 bankruptcy and putting itself up for sale.

Its CEO, Daniella Vitale, has blamed higher rent costs for its troubles and says the bankruptcy filing will allow the company time to reorganise its debts or sell parts of the business.

After announcing its bankruptcy on 6 August, Barneys reportedly secured a US$218m debtor-in-possession financing facility from Brigade Capital Management and B Riley Financial, which was approved last week. The approval will help the retailer in its goal of finding a new buyer by October.

It has until 24 October to find a buyer or face liquidation, according to Yahoo Finance.

Neil Saunders, analyst at GlobalData, believes the bankruptcy is the inevitable result of "a toxic cocktail of pressures" on the business.

"It has suffered from weak footfall as shoppers have increasingly defected to buying direct from luxury brands or from a new wave of online luxury sellers such as Net-A-Porter," he says. "In the physical world, new rivals have opened up – especially in New York where, for example, Neiman Marcus now has a store. Alongside this, Barneys has failed to develop its proposition which seems tired and has lost some of the edge that once made it special."

Meanwhile, Barneys launched a campaign yesterday (8 September) – 'Dear Shopper' – to coincide with New York Fashion Week, featuring a series of Instagram and Twitter posts directly addressing the rumours surrounding the bankruptcy.

"Like a lot of us out there, we have had our share of financial struggles. But, despite what you may have heard, Barneys is here to stay," an Instagram post begins. "To buy, to behold, to splurge, to strut, to indulge, to look fabulous are basic human instincts — and sometimes they can get us in trouble. Nevertheless, we are open for you. And this is not our last season."

The campaign also features store window signage such as: "Not Closed," "The Emperor Has Clothes," and "Barneys Til I'm Dead."

Barneys did not return a request for comment at the time of going to press.