By  on September 19, 1994

NEW YORK -- After a long period in which solvent apparel makers had little interest in visiting their bankers, the industry seems to be in a borrowing mood again.

Bankers servicing the industry say they have been seeing a pickup in both new and existing loan demand. The pickup has bolstered optimism about second-half prospects and apparel manufacturers' profitability levels.

However, the outlook is not without caveats. Bankers point out that retailing continues to be erratic and a strong fourth quarter is hardly a given. The continuing consolidation at retail also means manufacturers will have to be increasingly compliant to the demands of big stores.

(Accountants have an even dimmer view, as they point to the challenges faced by many apparel makers, especially smaller ones. See story, page 26.)

Nevertheless, according to bankers, the current lift in loan activity indicates there is a touch of renewed confidence about opportunities for growth.

"There has been significant new business for us in the last six to 12 months," said Anthony Scarpa, senior vice president, Chemical Bank, noting that Chemical has also been financing growth with existing accounts. As for the outlook on interest rates, bankers agree rates are unlikely to go down. "There's a potential -- depending on the Federal Reserve's view of inflationary threats -- for a modest uptick in interest rates," said Scarpa. He does not foresee a major impact on business conditions, however.

Donald Gibson, vice president at Chase Manhattan, said rates could rise anywhere from 25 to 50 basis points, but he does not see that denting growth substantially. Scarpa said the apparel business has been "more active and more positive this year than in the past two or three years." He observed strength in men's wear and children's wear. As to women's wear, he noted: "Sportswear has been tough, though we've seen some life in denim." Scarpa added that catalog retailers are also doing well. "It's definitely a better year in apparel now than last year," said Lissa Baum, senior vice president, Israel Discount Bank. "Women's wear is picking up in branded product."

Baum also said more of her company's customers are getting into home shopping, presenting "in-teresting product at low prices."

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