Barneys could end up at Saks, WSJ reports

Dive Brief:

Authentic Brands Group is in discussions to buy the Barneys brand for some $270 million, in a plan that would entail licensing the brand to Saks Fifth Avenue, the Wall Street Journal reported. ABG, Saks and Saks owner HBC didn't immediately return Retail Dive's requests for comment. Barneys didn't immediately return Retail Dive's request for comment.
Saks would install Barneys departments in some of its stores as well as run its website, according to the report. Authentic Brands is also negotiating with Barneys landlords to keep some of those stores open, the Journal said.
Barneys filed for Chapter 11 protection in August and a bankruptcy auction is scheduled for later this month. A group of investors led by entrepreneur Sam Ben-Avraham is also reportedly interested in bidding, but has encountered difficulty assembling the needed financing, according to the Journal's report.

Dive Insight:

Barneys is desperate for salvation, having said when it launched the bankruptcy process that it could run out of money before the summer was up.

The department store managed to secure some financing, but its brand is now likely to end up in others' coffers. Barneys for years enjoyed a perception of what Fashion Institute of Technology professor Shawn Grain Carter calls "downtown cool." It makes sense for Saks, which has invested heavily in returning to its luxury stance, to bring that, or what's left of it, in order to appeal to younger shoppers, according to retail analyst and consultant Sanford Stein, author of "Retail Schmetail."

"I think it's reasonable to believe that the Barney's brand has enough cache that it could bring a younger, Millennial shopper into Saks, at least that appears to be the thinking," he told Retail Dive in an email. "It sounds like they are planning on creating Barney's shops within Saks, and if it's executed well could indeed become a feature Saks needs."

But a takeover by a brand licensing company likely signals the end of the high-end, yet off-beat, creativity that Barneys was once known for, according to Thomai Serdari, a professor of luxury marketing and branding at New York University's Stern School of Business.

"The deal that is allegedly penned between ABG and Saks will capitalize on the ghost of the creative brand that Barneys used to be by transforming it into a series of soul-less, licensed merchandise for mass consumption," she told Retail Dive in an email. "Even though we may see ABG curating certain elements of the Barneys brand that maintain a link to its earlier authentic self, there is no way these can be as groundbreaking as Barneys has been. Pricing may keep the brand at the higher end of the spectrum but success for ABG can result from a safe formula of high pricing [and] guarded design. In other words, their sweet spot rests more with guarded than with avant-garde."