Loehmann's, the upscale discount retailer owned by the investment firm leg of Dubai's Istithmar World, filed for Chapter 11 bankruptcy protection yesterday.
Istithmar, which also owns Barneys, bought Loehmann's for $300 million in 2006.
To be clear, this doesn't mean Loehmann's is going out of business. But Istithmar has had major troubles making money off of the retailer, which mostly sells remnants of Barneys' warehouse sales. (I got my first designer bag--a cream Marc by Marc Jacobs hobo--there in 2006, actually.) Filing for Chapter 11 allows Istithmar to spend significantly less cash restructuring the company.
Now here's the real question: Is Barneys next? The luxury retailer, best known for introducing designers like Armani and Dries Van Noten to American customers, has required several injections of cash since the recession hit. However, Istithmar's appointment of former Gucci head Mark Lee as CEO in August means that the investment firm believes the retailer can be revived without a Chapter 11 filing.
Bottom line: Neither one of these retailers is going anywhere, but they are both in really bad shape financially. Will this affect your shopping experience? It might have already, and you just didn't think about it. As one young, exciting designer recently told us, "I don't want to be in Barneys because I've heard they don't pay [on time]."