Friday, June 29, 2007

Barneys comes to Dubai

That's Barneys (the fancy department store), not Barney (the purple star of the kids show).

Remember Barneys? Rachel, of the TV show Friends, worked at Barneys.

The business arm of the Dubai government has purchased Barneys. So reports The New York Times:
The clothing retailer Barneys New York, a temple to fashion that introduced Americans to Armani and $300 T-shirts, was sold yesterday to the investment arm of the Dubai government for $825 million.

The flagship Barneys store at 660 Madison Avenue in Manhattan opened in 1993.

The deal for Barneys, whose founder pawned his wife’s engagement ring to start it 84 years ago, represents a trophy for Istithmar, the arm of the Dubai government. It has been on a buying spree in the United States, purchasing a raft of high-profile businesses and real estate, like stakes in the retailer Loehmann’s Holdings and the investment bank Perella Weinberg Partners.
...
Unlike Saks Fifth Avenue or Neiman Marcus, Barneys never became a household name or a megabusiness. Despite cameos in “Sex in the City” and Vogue, it remained exclusive — its reach largely confined to the two coasts and a crowd of the ultra-fashionable.

Even so, Barneys, founded in 1923 as an off-price men’s suit store, has become a prized asset in fashion, renowned — and at times parodied — for sparse displays, obscure designers and aloof sales clerks.

Reviewing the store in The New York Times last year, Alex Kuczynski wrote that “to its New York department store brethren, Barneys is the cool kid in the class, the one with the magically floppy head of hair, while Bloomingdale’s is the head cheerleader and Lord & Taylor, the substitute teacher.”
...
With the sale of Barneys — arguably the most coveted part of the Jones business — it may be harder for the board to find a future buyer, said Andrew Jassin, managing director, Jassin-O’Rourke Group, a fashion consulting firm, and a former executive at Jones Apparel.

Still, he said, the price the Dubai government paid for Barneys is “a great gift to the shareholders of Jones Apparel.”
Women's Wear Daily looks at the tourist angle:
While many industry consultants, and even some investment bankers not involved in the deal, have speculated that international expansion in tourist locales is the primary reason why Barneys would be an attractive purchase for an overseas buyer, Jackson downplayed that analysis.

"I wouldn't oversell that idea in the sense that we start with underlying businesses that are sustainable, with attractive growth models. To the extent that we can expand into international markets where tourists are, it would be [an opportunity], but the primary business still has to work. From our standpoint, to be attractive in tourist locales, the core business has to work as an existing business before it can [be opened] in a stand-alone tourist compound," the ceo said.

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4 Comments:

Anonymous fellow atheist said...

That is not entirely accurate. There was an offer for $825m on the table. Barneys have 30 days to consider it. As far as I understand, those 30 days are not up yet.

9:26 AM  
Anonymous Anonymous said...

2 Things:

1) Rachel did not work at Barneys, she worked at head cheerleader, Bloomingdales.

2) In response to the comment about the accuracy of the $825m offer...you are completely off-base. Barneys has no say in who buys them, it is up to Jones on whom they will sell it to (ie, who will pay them the most). Under the terms of the definitive agreement with Istithmar, Jones is permitted to entertain unsolicited proposals from third parties to acquire Barneys. Any such third party proposal would have to be made by July 21, 2007. So that is where the 30 days comes into play, if an offer exceeds $825m within the next few weeks than Jones has the right to accept.
So that is how it goes my friend....

5:47 PM  
Blogger John B. Chilton said...

Anon 2 things:

1) My bad: http://en.wikipedia.org/wiki/Rachel_Green#Career (thanks to the EmirDaughter).

2) Yes. The price offered seems high enough to stifle any further offers.

3:32 PM  
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5:31 PM  

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