NEW YORK -- Although Barneys New York insists it is financially sound, with a very strong Christmas in its pocket, a number of factoring firms are still refusing to approve shipments to the chain.
Factoring executives' complaints haven't changed much from last December when there was a flurry of activity over slow payments: Barneys has not supplied current financial information and communications remain a problem.
That isn't the way Charles W. Bunstine 2nd, Barneys' chief operating officer, sees it.
"All the factors that do business with us," he said, "have complete financial information, including cash flow projections running to 1995."
He said sales in the first half of the current fiscal year are close to the $174 million generated in all of fiscal 1993. Barneys is on a July fiscal year.
Bunstine said Barneys' earnings before interest, taxes and amortization in the first quarter were 8.5 percent of sales and in the second quarter -- the Christmas quarter -- EBITA was 13.2 percent of sales. He said that as of Jan. 1, 1994, current assets were double current liabilities.
"Everybody is getting paid," he said.
To get the benefit of a credit guarantee, a client must first get the factor's approval before filling orders. Shipments made without approval forfeit the credit guarantee, leaving the seller to absorb any credit losses on those shipments.
One credit manager recalled that a major client had called about a large order from Barneys.
"I called the CFO five times and he never returned my calls," the credit manager said. "I called the client and told him that I wouldn't check a nickel on Barneys."
Jerry Sandak, executive vice president of Rosenthal & Rosenthal, would say only, "We are not approving shipments to Barneys at this time."
Mark Melson, attorney for the construction manager at Barneys Madison Avenue store, said Thursday that it had received two "substantial payments" from the store in the last 30 days but conceded there is "still money due us," referring to the contractor, Lehrer, McGovern Bovis.
He declined to say how much was due, but said it was considerably less than the $45 million Barneys expects to raise through a private placement -- a form of fund-raising through financial institutions, without the disclosure required in a public stock offering -- now being arranged by Chemical Securities, the investment banking arm of Chemical Bank.Barneys' Bunstine said all that is owed to the contractor is "normal retainage." He also said the uptown job "isn't finished yet."
Bunstine added that all payments on the new Beverly Hills store, currently under construction and set for an March opening, are current. As to liens against the Madison Avenue building, he said they are very small, a total of about $220,000.
Melson said he expected to be paid in full once the private placement is completed. He said there is no mortgage on the building and the private placement will be collateralized by the lease payments on the uptown store.
Another factoring executive noted that while his firm is not approving credit for Barneys, some clients ship the retailer on their own and accept the credit risk. In that type of transaction, the factor still tries to collect the account but, if unsuccessful, charges the amount of the receivable back to the client.
"We've had a lot of chargebacks on Barneys accounts," he said.
Gary Wassner, president of Hilldun Corp., a factor that specializes in financing small designers, said Monday that his firm is not approving credit to Barneys.
"Last December, after all those stories appeared in the press, Barneys paid us everything that was due and past due. It came to about $200,000. But going forward, nothing has changed. We still don't have any current financial information. That's what we're waiting for."
Bunstine said Barneys is doing business with the designers without Hilldun.
Another factoring executive said he has been getting requests for shipments to Barneys from some of his small clients and has been turning them down. However, he said he recently received updated financial information and has approved a relatively small shipment to Barneys.
Summing up the general attitude, one executive said, "We have a lot of clients that would like to ship to Barneys but based on their payment record, we're not approving shipments."
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