By  on April 22, 2010

Standard & Poor’s Ratings Services put Barneys New York Inc.’s corporate credit rating on review with positive implications Wednesday in another sign of the improving prospects for luxury apparel.

Barneys is rated “CCC,” meaning its obligations are vulnerable to nonpayment. A review, typically completed within 90 days, could bump it up to a “CCC-plus” or possibly into the more desirable, although still speculative, “B” family.

David Kuntz, the analyst who wrote the S&P research note, said Barneys, like upscale retailers Saks Inc. and Neiman Marcus Inc., is expected to register stronger fourth-quarter sales and profitability. The prospects for the first half of 2010 are promising, as well.

Unlike Saks, which is publicly held, and Neiman’s, which is private but has public debt, Barneys doesn’t disclose its financial results. The retailer is owned by Istithmar World, the investment arm of the state-controlled holding company Dubai World, which pumped additional money into Barneys last year.

The outlook for Saks was moved to “stable” from “negative” in November, and Neiman’s was similarly upgraded in December. Saks carries a “B-minus” rating, two notches above Barneys’ current status, while Neiman Marcus is rated “B.”

“We realize that Barneys is edgier and more fashion forward than Saks and Neiman’s, but all these stores play in the luxury department store retail space,” Kuntz told WWD. “There are differences based on scale, scope and geographic concentration, but they all tend to move similarly.”

While improving sales trends and weak comparisons with 2009 are expected to benefit operating results at Barneys during the first half, Kuntz said S&P will take a “deeper dive” into Barneys’ liquidity during the upcoming review. “We anticipate that the liquidity situation will continue to improve over the near term due to performance gains,” he wrote. “However, despite the strengthening of operations, we expect that the company’s credit protection profile will remain weak.”

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