Barneys New York secures $50 million in credit
Faced with a rent hike at its NYC flagship, American department store chain Barneys New York has reportedly received a lifeline, having successfully extended the term of its credit line by $50 million.
People familiar with the matter told CNBC that the financing is an extension of Barneys’ current credit agreement with Wells Fargo and brings long-term-oriented fund TPG Sixth Street Partners on board as a new lender.
“Barneys New York has a long-standing business relationship with Wells Fargo,” explained a Barneys spokesperson in a statement given to CNBC. “Our most recent agreement is an extension of our current credit agreement that we have had in place with Wells Fargo since 2012.”
Despite resistance from the retailer, which has been owned by Perry Capital since 2012, the rent on its Madison Avenue flagship reportedly shot up from around $16 million to close to $30 million in January of this year.
The increased charge almost decimated the company’s EBITDA, though the retailer has stated that its EBITDA is still positive and is predicted to remain so over the course of this year.
Earlier reports that Barneys was planning to downsize its New York flagship have since been denied by the company.
Like a number of other luxury-focused brick-and-mortar retailers, Barneys has been struggling to keep up with online rivals. This increased competition has pushed the company to explore new categories and markets, a search which recently resulted in the opening of upscale cannabis concept “The High End” in the chain’s Beverly Hills flagship, the first initiative of its kind launched by a major US retailer.
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