A potentially lucrative licensing deal is at the center of Authentic Brands’ rescue plan for Barneys. According to the Wall Street Journal, a Wednesday filing with a U.S. Bankruptcy Court in New York confirms that a $271 million stalking-horse bid has been made by Authentic Brands – the brand developer that maintains a wide roster of fashion and apparel companies, ranging from Juicy Couture and Judith Leiber to Jones New York, Volcom, and Aeropostale – in conjunction with investment firm B. Riley Financial Inc.
At the center of the “tentative” deal – in which Authentic Brands Group LLC and B. Riley Financial Inc. will acquire Barneys New York’s assets, and likely close all of the luxury chain’s remaining stores (although, sources say it could be possible that a few stores would remain open) – is yet another deal: one between Authentic Brands/B. Riley Financial and Saks Fifth Avenue-owner Hudson’s Bay Co., in which Authentic Brands/B. Riley Financial would “license the Barneys name to Hudson’s Bay Co.”
The WSJ reported early this week that Saks was “in discussions to open Barneys departments within some of its stores and take over Barneys’ website,” which Reuters confirmed would follow from the licensing deal.
Technically speaking, such an agreement, if it comes to be, would see Authentic Brands/B. Riley Financial – the potential future owners of all Barneys’ assets, including its various trademarks (from those for its name to variations, such as Barneys New York Influencer, Made to Measure Barneys New York, and Freds at Barneys, among many others) – trade off the right to use the Barneys trademarks in certain categories of goods and services for a set period of time to another company (here that would be Saks via Hudson’s Bay Co.), generally in exchange for a hefty fee and then recurring royalties based on sales.
In furtherance of such a deal, the licensor – Authentic Brands/B. Riley Financial in this case – will generally bring in revenue from is grant of rights to use various intellectual property and from royalties, as well, while the majority of money earned from sales of the products manufactured, marketed and sold in connection with the deal will be assigned to the balance sheet of the licensee, Saks/Hudson’s Bay Co.
More than that, though, the deal would enable Authentic Brands/B. Riley Financial – which, by the sounds of things will run the remaining Barneys brick-and-mortar outposts (if there are any) – and Saks to coexist in the market. More specifically, it will enable Saks – which will use Barney’s branding within its own stores and on the Barneys e-commerce site – to make use of the trademark-protected Barneys name without running afoul of federal trademark law.
Barneys has been trying to avoid liquidation since its Chapter 11 filing in August, according to the WSJ, with its most recent plea to a New York bankruptcy court for an extended deadline in order to land a deal with a lead bidder.
“We are encouraged by the stalking horse bid by Authentic Brands Group/B. Riley Financial in partnership with Saks Fifth Avenue,” a Barneys spokeswoman said on Wednesday. However, the WSJ reports (and a rep for Barneys has confirmed) that the retailer is “actively pursuing” additional options, including from a group led by Sam Ben-Avraham, who have expressed their intent to submit bids during the coming auction process. Barney’s has until October 22 to strike a definitive deal or face liquidation.