Istithmar has until Aug. 3 to make a higher bid for Barneys, which is made up of flagship stores here, Beverly Hills, Chicago, Boston and Dallas; two regional full-price stores; 14 CO-OP Barneys New York stores; and 13 outlet stores. If the Istithmar bid is refused, Jones must pay the firm a $22.7-million cancellation fee.

Jones' other chain footwear and apparel stores, which include Easy Spirit, Jones New York, Nine West and others, fell 8% year over year during the second quarter, which ended July 7. The sales deterioration started during last year's fourth quarter and is due to a "weak retail climate," said Wesley Card, Jones' president and chief executive officer, during a conference call.

The company is investing money in store renovations and does not expect major store closures beyond what it usually undertakes on a yearly basis, Card says. The firm is also considering acquiring more chains. "We're always looking at opportunities," he says.