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View Full Version : Howard Socol to resign from Barneys, citing disagreement with the new owners.



Faust
05-12-2008, 12:50 PM
Wow....</p>

From NYT (http://www.nytimes.com/2008/05/10/business/10shop.html?_r=2&amp;oref=slogin&amp;partner=rssnyt&amp;emc=rs s&amp;pagewanted=print)</p><h1><nyt_headline version="1.0" type=" ">
The Chief of Barneys Is Expected to Resign
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</nyt_byline><div class="byline">By MICHAEL BARBARO (http://topics.nytimes.com/top/reference/timestopics/people/b/michael_barbaro/index.html?inline=nyt-per) and ERIC WILSON (http://topics.nytimes.com/top/reference/timestopics/people/w/eric_wilson/index.html?inline=nyt-per)</div>


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Howard Socol, the chief executive of Barneys New York (http://www.nytimes.com/mem/MWredirect.html?MW=http://custom.marketwatch.com/custom/nyt-com/html-companyprofile.asp&amp;symb=BNNY),
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.</p>


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. </p>


Barneys, considered the trophy store for premier fashion labels like Lanvin, Prada and Giorgio Armani (http://topics.nytimes.com/top/reference/timestopics/people/a/giorgio_armani/index.html?inline=nyt-per),
was sold to Istithmar, the investment arm of the Dubai government, for
$942 million in August by the clothing maker Jones Apparel.</p>


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. </p>


?The frustration level was pretty high,? said a person familiar with Mr. Socol?s thinking.</p>


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.</p>


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. </p>


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.</p>


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. </p>


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 (http://topics.nytimes.com/top/news/business/companies/target_corporation/index.html?inline=nyt-org).</p>


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.</p>


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. </p>


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.</p>


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. </p>


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.</p>


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. </p>


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. </p>


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.</p>


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.</p>

</p>

</p>

Casius
05-13-2008, 01:34 PM
I wondered if something like this was going to happen. Guess it's rather inevitable when new owners come into the picture and want to expand the company.</p>

Wonder where they wanted to open a Barneys? </p>

Faust
05-13-2008, 01:37 PM
Oh, I am positive they would want it all over Dubai, and probably in London too. I wonder what the exactly the problem was, but I wouldn't be surprised if they just want to brand the shit out of it, even though it's branded enough.

Casius
05-13-2008, 01:46 PM
I think that's one of the problems. I also read that it is really hard for a company out of the US to start opening internationally. </p>

Dubai was my first thought too, which, it might actually be a good place to open. But yea, if they want to open 10 Barneys in the near future....That may be a little much. </p>

Faust
05-13-2008, 01:50 PM
I wouldn't be surprised if Sokol's concern is overexpansion. It already nearly killed Barneys once, and it turned Saks from a venerable department store into a mall for soccer moms and their little brittneys and christinas (oh, and nearly killed it too - they had to close like 50 stores or something - I'm sure yousuck knows more).</p>

Dubai would be a good option because of the whole Sex and the City thing, but you can bet that it would a boring outpost. London on the other hand seems like a great option, although the retail scene there seems really saturated. Brand name is a brand name though - Dover Street Market seems to be doing just fine.</p>

Casius
05-13-2008, 01:54 PM
A Dubai Barneys would be a boring a outpost but I also still wonder to this day why IF opened a boutique out there and if it's doing well?</p>

Even Hong Kong would maybe be a good place to look but I just can't see it making sense at opening 2-3 more Barneys around the globe. Because like you said, you don't want it to turn into that department store this is 'a department store'. </p>

Faust
05-13-2008, 02:04 PM
IF's boutique is in Beirut. A great place to be, because they got the whole live-for-today thing pat down, which is conducive to shopping.

iSuck
05-13-2008, 02:05 PM
A few years ago Saks closed I want to say 7-10 of their Resort/C Level stores. Part of it was over-expansion and part of it was just Saks in general that had lost it's voice and customer. It was trying to capture a young, contemporary customer who didn'twant to shop there as they were not hip enough and then they lost their classic customer as they tried to become too trend driven and stopped offering their house brand among other things. </P>


Saks has opened up in Dubai and Mexico City and will soon to have a store in Shanghai (all of them are partnerships/licenses with other retailers in those countries) and are also thinking about Russia. I'm sure Barneys would have the same game plan.</P>


Harvey Nichols already has stores in Dubai, Istanbul, Hong Kong and Riyadh.</P>

laika
05-13-2008, 02:05 PM
Cas, IF is owned by a woman named Maya Shehadeh and her family actually opened the first IF boutique in Beirut in the 70's, sometime before the NYC store. So they have roots in that part of the world. [75]

Faust
05-13-2008, 02:08 PM
Thanks, yousuck. HN, ehh, that store blows. It was supposed to be the English Barneys, but it went bland in no time.

Casius
05-13-2008, 04:19 PM
Cas, IF is owned by a woman named Maya Shehadeh and her family actually opened the first IF boutique in Beirut in the 70's, sometime before the NYC store. So they have roots in that part of the world. [75]
</p>

Thanks for clearing that up! I had no clue.</p>

I did really like the store in NY, one of my more favorite places I visited. (store wise) </p>

laika
05-13-2008, 04:26 PM
^you're welcome! I agree, IF is the best. Philip--the guy who looks like an Andy Warhol blow-up doll--is my fave SA in the city. Super knowledgeable and helpful, and always willing to give a very honest opinion. [73]

Seventh
05-13-2008, 05:03 PM
Interesting, thanks for posting Faust. How do you think this will effect the purchasing decisions of the NYC Barneys over the short term (next 3-5 years)? My limited understanding was that Barneys was doing well, it seems strange that the new owners want to change a good/profitable thing?

Slightly off topic, but are there examples of expansion that have done well? Other than CDG guerrilla stores/DSM, I can' t think of many...
</p>

</p>


</p>

I wouldn't be surprised if Sokol's concern is overexpansion. It already nearly killed Barneys once, and it turned Saks from a venerable department store into a mall for soccer moms and their little brittneys and christinas (oh, and nearly killed it too - they had to close like 50 stores or something - I'm sure yousuck knows more).</p>

Dubai would be a good option because of the whole Sex and the City thing, but you can bet that it would a boring outpost. London on the other hand seems like a great option, although the retail scene there seems really saturated. Brand name is a brand name though - Dover Street Market seems to be doing just fine.</p>

deleuze
05-13-2008, 06:54 PM
There is an IF in Dubai also http://www.ameinfo.com/117272.html

Faust
05-14-2008, 01:16 PM
Interesting, thanks for posting Faust. How do you think this will effect the purchasing decisions of the NYC Barneys over the short term (next 3-5 years)? My limited understanding was that Barneys was doing well, it seems strange that the new owners want to change a good/profitable thing?

Slightly off topic, but are there examples of expansion that have done well? Other than CDG guerrilla stores/DSM, I can' t think of many...
</p>

</p>


</p>

I wouldn't be surprised if Sokol's concern is overexpansion. It already nearly killed Barneys once, and it turned Saks from a venerable department store into a mall for soccer moms and their little brittneys and christinas (oh, and nearly killed it too - they had to close like 50 stores or something - I'm sure yousuck knows more).</p>

Dubai would be a good option because of the whole Sex and the City thing, but you can bet that it would a boring outpost. London on the other hand seems like a great option, although the retail scene there seems really saturated. Brand name is a brand name though - Dover Street Market seems to be doing just fine.</p>

</p>

I don't know, Casey - one can only guess. The most obvious guess would be is that their buying will become blander? But who knows, maybe there is nothing to it. I am not sure what you mean by your last question - expansion and overexpansion are two different things. Sure, there is a myriad of successful expansions.
</p>

Faust
05-14-2008, 01:18 PM
There is an IF in Dubai also http://www.ameinfo.com/117272.html
</p>

That's interesting - thanks for posting.</p>

Casius
05-14-2008, 01:42 PM
There is an IF in Dubai also http://www.ameinfo.com/117272.html
</p>

That's interesting - thanks for posting. </p>

</p>

I thought you knew that Faust? I could have sworn it was you or Laika that posted the article in this forum. :D </p>

Faust
05-14-2008, 01:44 PM
No, that was the one about Beirut, I think. Although, you may be right. [76]

Casius
05-14-2008, 01:48 PM
Haha, either way, I wonder if the store is doing well over there?

Faust
05-14-2008, 01:58 PM
Haha, either way, I wonder if the store is doing well over there?</p>

I can ask [66]</p>

matthewhk
05-16-2008, 03:19 AM
Barney's in Hong Kong would be a terrible business move. Lane Crawford IT and Joyce already have all of Barney's bases covered (more or less) and some more, and business ain't so hot for any of them. They tried opening Harvey Nichols here and ithas beena titanic flop. The only reason it's still standing is probably because it takes so much space up, i bet they're losing money no doubt