Jones Apparel Close to Selling Barneys to Dubai Investment Firm

NEW YORK – Barneys, a name that has become synonymous with high New York fashion, is close to being sold to a Dubai investment arm for $800 million to $850 million, a newspaper reported on Thursday.

According to The Wall Street Journal, final negotiations between Dubai's Istithmar fund and Barneys parent, the New York-based apparel and accessories company Jones Apparel Group Inc. (JNY), are still being worked out. An announcement is expected by Monday, the newspaper said, attributing the details to an anonymous source familiar with the matter.

Calls to Jones Apparel, which also has such labels as Nine West and Evan-Picone in its stable, were not immediately returned.

Jones acquired Barneys New York for $400 million in 2004, marking its first foray into the growing luxury market. Barneys competes with other retailers like Saks Inc. (SKS) and Neiman Marcus Group Inc.

The oil-rich United Arab Emirates has shown an increasing appetite for investments in other parts of the world. 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 Istithmar's Web site.

Jones, faced with a sluggish stock price and weak sales in its moderate apparel divisions, is expected to invest proceeds from Barneys' sale in higher-end labels that may rejuvenate its overall business, according to Dan Hess, founder and CEO of Merchant Forecast, a New York-based research firm.

The moderate-priced apparel business has been hurt the most as department stores consolidate their operations and look for ways to differentiate from rivals by coming up with their own store label alternatives.

"I think that it is a good move Jones is selling," said Hess, who couldn't confirm the deal. "Jones' core competency isn't in retailing. Barneys is an exception. It is an extremely well-run company and Jones was smart enough not to meddle."

Last year, CEO Peter Boneparth put Jones up for sale, but took it off the market when it didn't attract the right price.

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.

In May, Jones Apparel offered a cautious outlook as it reported a first-quarter net income gain of 85 percent on fewer charges and said it would sell some moderate-price lines. Then, Boneparth said that Jones' denim and junior division and labels such as Gloria Vanderbilt, l.e.i., Energie, GLO, Jeanstar, Grane and others would not be affected.

Shares of Jones New York slipped 22 cents to $28.98 in morning trading Thursday, the low end of the company's 52-week per share range of $27.30 to $35.54.