News has been trickling in all week about confusion around the strategic direction being taken by Barneys and today, the New York Times is reporting that its highly respected CEO Howard Socol will resign next week. This is an abrupt change of tone in the buzz around Barneys, which is arguably the most influential and forward thinking luxury and fashion department store chain in America today.
Bergdorf Goodman, of course is a venerable store in its own right, but it only has one location in New York and its sister company, Neiman Marcus, based in Dallas, is far removed from the New York fashion hub. Yes, Neimans serves an unequaled luxury customer, but it just does not have the fashion cred that Barneys has managed to build in recent years. Barneys’ affable Fashion Director, Julie Gilhart, has been a champion of emerging talent and amongst others, is credited with recognising the talent of the Proenza Schouler boys, buying their graduate collection from Parsons.
But, is Barneys about to become a basket case?
Earlier this week, Barneys announced a puzzling collaboration with Target, raising eyebrows amongst opinion leaders in the fashion industry. While Target has certainly built fashion cred in its own right through its Go International designer collaboration campaign, it is unclear why Barneys, associated with the highest end of luxury and design, needs to collaborate so closely with a mass market chain — right down to putting the Target Bullseye logo in its windows.
The back story to all of this leads to private equity and the economy. After a huge bidding war last year, Barneys was bought by Dubai-based Istithmar for almost $1 billion. Istithmar is now pushing for an international expansion strategy that apparently conflicts with Socol’s own views on how to grow the business. And, with the U.S. economy in the doldrums, Barneys has been resorting to strategic moves that would have been unthinkable a few years ago.