HBAYF - Barneys New York May Live On at Saks Fifth Avenue
Two months ago, Barneys New York filed for bankruptcy, brought down by a combination of slowing sales and a sharp increase in the rent for two of its flagship stores. Since then, management has been scrambling to avoid liquidation.
Unfortunately, the potential buyers most likely to keep Barneys open for business -- a group led by entrepreneur Sam Ben-Avraham -- have been unable to secure financing for a bid thus far. Instead, the luxury department store's best hope of survival may be to become a department in another store: longtime rival Saks Fifth Avenue. That's what lead bidder Authentic Brands Group and Saks owner Hudson's Bay (OTC: HBAYF) are proposing for the retail icon.
A few years ago, multinational department store conglomerate Hudson's Bay might have been eager to buy Barneys New York out of bankruptcy. However, new CEO Helena Foulkes has moved aggressively over the past year and a half to unwind most of the company's global expansion. The goal is to simplify the company and focus on its two biggest and most successful chains: Saks Fifth Avenue and Hudson's Bay. As a result, Hudson's Bay has no interest in buying Barneys outright.