There could be a break soon in the strained relations between Barneys New York and the factor community.
This story first appeared in the March 20, 2009 issue of WWD. Subscribe Today.
On Thursday, one key factor sent a letter to vendors and designers stating that orders are still being held up pending the arrival of pertinent financial information from Barneys, which is owned by the Dubai-based Istithmar.
But Istithmar chief executive officer David Jackson, responding to news of the letter, told WWD, “We are continuing to work alongside Barneys management to resolve the concerns of the factoring community. We hope to have a resolution in short order.”
In his letter to vendors and designers, Gary Wassner, president of Hilldun Corp., wrote: “We continue to be led to believe Istithmar is going to support Barneys. But until we see actual details, projections and have an opportunity to review and discuss, we are holding/declining orders. It makes sense that they will try to stabilize the business and get through this difficult year in hopes of selling the company at some future point.
“We are waiting for news from them this week,” Wassner wrote. “The meeting that they [Barneys] scheduled with their banks for Monday [March 16] was held yesterday [Wednesday] instead. We will keep you posted.”
While said to be generally current on paying bills, Barneys nevertheless owes factors millions of dollars and is said to be experiencing some cash flow difficulties. That’s holding up certain shipments, but not all. Barneys’ Madison Avenue flagship appears amply filled with spring designer merchandise and displays few goods that are marked down.
Barneys’ issues are compounded by operating without a ceo since the departure of Howard Socol last July. Socol remains on the board. An appointment is expected around midyear. In the meantime, the store is run by a committee of executive vice presidents and senior vice presidents.
Wassner told WWD his firm’s policy of not approving orders for Barneys hasn’t changed since late February when Hilldun began asking for more information from the luxury chain.
“We sent this [letter] to all of our clients today because they are getting orders for fall as well as orders to ship now for March, and they want to know what to do. Not having the information is making both of those situations difficult. They don’t want to commit to fabric and make purchases for fall orders and deliveries until we approve,” he said.
As for March, “We are telling them don’t ship anything now. Once we get the information and are comfortable with what we get, we will begin approving orders again,” Wassner said.
He explained his clients already have the goods packed for March orders. “The goods are ready to ship once they get our OK,” he said.