Barneys of New York as they are preparing themselves for a Chapter 11 bankruptcy, they find that morale is low and vendors want their merchandise back!!!
An employee who wishes to remain anonymous has stated that certain designers have asked for a return now for their merchandise bypassing the usual return to vendor (RTV). The company has told FOOTWEAR NEWS, “Our board and management are actively evaluating opportunities to strengthen our balance sheet and ensure the sustainable, long-term growth and success of our business.” An odd statement to make with all that is confronting Barneys.
Barneys payroll department sent out an email to its employees, informing them of a onetime change to payroll that would essentially pay them two paychecks at once, before the company returned to paying on its normal schedule.
The source says inventory levels in the unit have dropped significantly in the last three weeks. “Managers [are] taking all their vacations,” they said, and “corporate is not answering questions.” But “everyone in the store knows what’s happening—there’s a big pink elephant in the room and one of our HR people has been walking about saying they’re praying for a miracle [to save the store].”
The silence from upper management prompted the source to reach out to their union—the New York New/Jersey Regional Joint Board of Workers United, which represents more than 7,000 workers in the retail, manufacturing, and garment industries.
In the email chain, which was also forwarded to JCK, the Workers United representative said the retailer has “completely shut down with respect to responding to my inquiries,” and added, “Right now, the situation in NY is very grim. They are starting to cut hours of our members, they have not paid health insurance premiums, they have not sent us our members union dues or made their pension payments…in NY we have decided to hold off on filing charges at this time. We are waiting to see if they file Chapter 11.” This is a sad scenario for a store that has been around for decades. I would imagine there are those employees who are still hoping that Barneys will survive. And others who just want the other shoe to drop.
The very last thing JC Penney needs is a tariff- wielding President Trump. A large majority of the tariff increase will impact consumer goods from smartphones to apparel.
Shares of major retailers — notably struggling names such as J.C. Penney — promptly plunged on the news. And rightfully so — tariffs would significantly raise the costs to acquire inventory for retailers. Moreover, retailers could find it damn near impossible to successfully raise prices on consumers to offset their increased costs.
J.C. Penney’s first quarter same-store sales plunged 5.5%, worse than the year ago marginal increase of 0.2%. The company lost a staggering $154 million in the quarter. Free cash flow was an outflow of $268 million compared to a $421 million outflow a year ago. With so much apparel coming from China, Penneys can up the price on consumer goods, this will send consumers elsewhere, and if they eat the pay hike on the merchandise this will not help either, it is a no win situation for a store that has been at death’s door for quite a long time now.
Pennys also has a $4 billion dollar debt that will come due within a few years and compound this with dismal sales and the tariff, they might as well throw up a white flag now.
Content JCK Magazine