By  on February 16, 1994

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.

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