NEW YORK — Department store chain Mervyns lost credit approval from CIT Group Inc. for $40 million in orders.
Mervyns, which was previously owned by Target Corp. and taken private in 2004, has been swathed in turmoil. The mid-tier retailer so far has cut 315 jobs, closed over 80 locations and replaced its top executive. John Goodman, a former Levi Strauss executive, is now Mervyns’ CEO.
Mervyns said none of its other major factors or vendors have pulled back lending. “In fact some of the factors have reached out to us to expand their business with Mervyns,” said Roy Burces, spokesman for the company.
Only one-fifth of Mervyns’ business is supported through factors, and the company said it is comfortable with its liquidity position.
All of which indicates that the pullback could largely be specific to CIT and its share of woes.
CIT has been hit hard by the sub-prime mortgage mess, which forced the lender to sell assets and borrow $7.3 billion to repay debt and provide financing. The company posted a loss in the first-quarter, hurt by its home and consumer lending divisions, and cut its dividend 60 percent.
CIT’s pullback is just one of several credit crunches that has impacted the retail industry. Last month Sears Holding Corp., Talbots Inc. and Coldwater Creek announced their major lenders also stopped approving credit facilities.