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Jones Apparel transacts Barneys with Dubai firm for 825 million dollars

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Jones Apparel Group is selling Barneys New York to Dubai-based private-equity firm Istithmar for $825 million.

Jones is selling the high-end, 34-unit department-store chain to “reduce the level of required capital expenditures (so) we will have greater financial flexibility in the execution of our business strategy,” according to a company statement.

The Barneys portfolio comprises flagship stores in Beverly Hills, Chicago, Boston and Dallas; two regional full-price stores; 14 CO-OP Barneys New York stores; and 13 outlet stores. A fifth flagship store is scheduled to open in San Francisco.

Jones Apparel Group, the maker of Jones New York clothing and Nine West shoes, acquired Barneys in 2004 for $400 million. At that time, the chain operated 21 stores across the country.

The Barneys buy is part of a string of private-equity acquisitions in the retail industry in the last few years. Chains that have recently been bought include Outback Steakhouse, Claire’s Stores and Dollar General.

The United Arab Emirates has been showing an increasing zeal for overseas investments. In the three years since its inception, Istithmar has invested in more than 30 companies in three sectors – consumer, industrial and financial services – deploying in excess of $1.6 billion of capital, according to the company’s website. Istithmar sees “incredible growth prospects” for Barneys, says David Jackson, the firm’s CEO.

For its last fiscal year, Jones Apparel reported a net loss of $144.1 million, or $1.30 per share, down from a loss of $274.3 million, or $2.30 per share, for 2005. Revenue for the year was $4.74 billion, down from $5.07 billion.

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