Rent at Barneys' flagship on Madison Avenue jumped from roughly $16 million to approximately $30 million in January, nearly wiping out its earnings before interest, tax, depreciation and amortization, people familiar with the transaction said.
div > div.group > p:first-child"> The retailer has extended the term of its credit line by $50 million, giving it money for growth, as well as needed liquidity to weather industry challenges and a rent hike at its famed New York flagship, people familiar with the talks told CNBC.
A Barney's spokesperson said in a statement,"Barneys New York has a long-standing business relationship with Wells Fargo. Our most recent agreement is an extension of our current credit agreement that we have had in place with Wells Fargo since 2012. The additional capital will support our business growth plans with new store openings and renovations, innovative in-store and digital experiences, and international growth initiatives.
Adding pressure to luxury goods brands, including Coach-owner Tapestry and jeweler Tiffany, is the slowdown they've seen as Chinese tourist spending in the U.S. tapers. Chinese shoppers are expected to comprise 46 percent of the global luxury market by 2025, according to consulting firm Bain. This ties the fortunes of the luxury market closely to the economic swings of the Chinese economy.
With that backdrop, the Manhattan luxury retail landscape continues to evolve, as retailers can no longer afford to use the city's expensive midtown property as a marketing tool. Ralph Lauren closed its Fifth Avenue store in 2017, while Hudson's Bay Company's Lord & Taylor closed its Fifth Avenue flagship in January.
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