Aug. 5 (Bloomberg) -- Jones Apparel Group Inc. will accept an increased $950 million cash offer from Fast Retailing Co. of Japan for its Barneys New York stores chain, unless Dubai's Istithmar PJSC can match that bid by Aug. 8.

The offer by Fast Retailing, Asia's biggest clothing retailer, tops by $50 million one made by Istithmar, an investment firm owned by the Dubai government, said Bristol, Pennsylvania-based Jones in a statement on its Web site today. Jones will pay $22.7 million to Istithmar if the U.S. company decides to drop the Dubai firm's offer, Jones said.

Jones's Chief Executive Officer Wesley Card is shedding Barneys, the seller of items such as Helmut Lang clothes and Fendi handbags at seven locations, to focus on Jones New York, Anne Klein and Nine West. Barneys stores will help Fast Retailing, the owner of the Uniqlo casual clothing stores, expand in the U.S. and within the luxury goods market.

``The buyer being a retailer, to me is a plus,'' said Jeffrey Bloomberg, a principal with Boston-based Gordon Brothers Group LLC, a financial-advisory firm for retailers, on Aug. 3. ``They have to expand the Barneys business in the U.S. and internationally.''

Istithmar previously bid $825 million to purchase Barneys, under an agreement that allowed competing offers, including any bids for all of Jones. Fast Retailing, which made an earlier offer of $900 million, first disclosed its interest July 5.

Barneys has outpaced discount and department stores in sales growth. Revenue at stores open at least a year climbed 10 percent in the first quarter compared with a 0.6 percent gain for Macy's Inc., the second-largest U.S. department-store chain. Jones didn't release second-quarter figures for Barneys.

Fast Retailing

Jones acquired Barneys, founded by Barney Pressman as a cut-rate men's suit store in 1923, three years ago for $291.3 million and repurchased $106 million in debt.

Barneys, whose rivals include Neiman Marcus Group Inc., also runs 14 CO-OPs stores that target younger shoppers and feature brands such as Theory. In addition, the company has 13 outlets. Barneys doesn't have any international locations.

Fast Retailing, founded in 1963, operates 1,800 stores in 12 countries, selling apparel brands including Theory, Comptoir des Cotonniers and Princesse tam.tam. Fast Retailing first disclosed its interest July 5.

Fast Retailing lowered its full-year forecast last month after a weaker performance at units including Uniqlo cut third- quarter profit by 2.6 percent. The company opened a New York flagship store in November.

Istithmar's Plans

Istithmar said in February it planned to spend $1.7 billion this year buying retail, industrial and financial- services companies. Since 2003, the firm has acquired New York properties including the W Hotel Union Square and a $1 billion stake in London-based bank Standard Chartered Plc.

Card said Aug. 1 that Jones was considering using proceeds from the sale to ``return a substantial amount of capital to shareholders.''

Jones also cut its annual forecast for the second time in three months that day, and said the rest of the company isn't for sale, sending the shares down 12 percent.

Shares of Jones fell $1.33, or 6.1 percent, to $20.51 on Aug. 3 in New York St Exchange composite trading. The stock has dropped 39 percent this year. Fast Retailing, based in Yamaguchi in west Japan, fell 100 yen, or 1.5 percent, to 6,720 yen on the Tokyo Stock Exchange.

To contact the reporter on this story: Cécile Daurat in New York at cdaurat@bloomberg.net

Last Updated: August 5, 2007 15:30 EDT