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From NYT
The Chief of Barneys Is Expected to Resign
The Chief of Barneys Is Expected to Resign
Howard Socol, the chief executive of Barneys New York,
who restored the company?s stature after it fell into bankruptcy in the
1990s, has told colleagues he intends to resign, according to people
knowledgeable about the situation.
The people, speaking on the condition of anonymity because Mr. Socol
was still completing his plans, said he might announce his resignation
as early as next week. They said that Mr. Socol had disagreed sharply
with the new owners of the chain over its strategy, especially plans to
expand the Barneys name overseas.
Barneys, considered the trophy store for premier fashion labels like Lanvin, Prada and Giorgio Armani,
was sold to Istithmar, the investment arm of the Dubai government, for
$942 million in August by the clothing maker Jones Apparel.
The latest transition of ownership had appeared to be running
smoothly, at least publicly. But Mr. Socol, 62, had begun to complain
to associates about Istithmar?s desire to open more Barneys stores in
international markets and how those stores would be operated.
?The frustration level was pretty high,? said a person familiar with Mr. Socol?s thinking.
Dawn Brown, a vice president and spokeswoman for Barneys, said the
company had no comment. Representatives of Istithmar did not return
multiple phone calls and e-mail messages on Friday.
International expansion has proved a challenge for many American
luxury brands, which must confront a patchwork of foreign regulations
that they fear will hamper their business. Sometimes they are required
to take on local business partners and give up some control, tricky
terrain for retailers whose brand image is the core of their business.
Mr. Socol had agreed to remain with Barneys after the sale, but the
contract that he signed last June included an option for him to leave
if he chose, according to two executives at Barneys. As of Friday, the
timing of his departure was unclear.
Since Istithmar emerged as the victor in a bidding war last summer,
Barneys has been more aggressive in its pursuit of hot designer
exclusives and regained some of the irreverent, experimental attitude
that once made the store seem so hip.
Last year, Barneys began carrying a lower-priced collection designed
by the model Kate Moss, and on Friday, Barneys introduced perhaps its
most controversial marketing strategy in years by selling an
ultra-cheap line of fashion made for Target.
While it is a temporary promotion, carrying the Target clothes,
priced from $15 to $45, and putting Target?s red bull?s-eye logo in its
windows along Madison Avenue has caused perplexed reactions among some
consumers and retail analysts, who are more accustomed to Barneys as
the exclusive domain of $6,945 Balenciaga boots.
Several store executives said this week that the weak economy had
taken a toll on the luxury business and that sales had been much weaker
than they had anticipated. It was unclear what role, if any, these
problems might have played in Mr. Socol?s decision.
Aside from New York, Barneys also has major stores in Beverly Hills,
Chicago and five other markets, and more than a dozen denim- and
trend-focused Co-Op stores around the country.
Since the company emerged from a three-year bankruptcy in 1999, it
has slowly returned to profitability and has recovered from its
crippling debt burden of more than $100 million, which was caused by
the nationwide expansion. That included the opening of its most famous
and extravagant store on Madison Avenue in 1993.
The company?s reputation was damaged by the bankruptcy, and many
customers who were loyal to the 85-year-old store were upset when
Barneys closed its original quirky flagship store in Chelsea, on
Seventh Avenue and West 17th Street, in 1997.
Mr. Socol, an accomplished retail executive who had led the regional
Burdines department store chain until 1997, joined Barneys in 2001 at
the recommendation of Allen I. Questrom, whom he succeeded.
Under Mr. Socol?s direction, Barneys took a two-tiered approach to
recapturing the glory of its designer business. The company raced to
land exclusives with the hot labels of the moment, for example, by
giving early support to the label Proenza Schouler and by creating an
in-store boutique for the French luggage maker Goyard.
At the same time, it capitalized on the growth of the contemporary
market for slightly lower-priced fashion and denim labels. As some of
its competitors held onto aging midpriced labels, Barneys drew more
customers with $200 jeans, spinoff sportswear lines and
younger-trending designers like James Perse, Earnest Sewn and Rag and
Bone.
Though the chain does not release financial results, Mr. Socol?s
two-pronged strategy is widely perceived to have worked, propelling
Barneys back to the pinnacle of fashion retailing.
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