NEW YORK — Several factoring firms Thursday put a hold on shipments to Woolworth Corp. in the wake of the retailer’s announcement Wednesday regarding “accounting irregularities.” Woolworth has said it will restate its financial results for the year ended Jan. 29 in view of the irregularities.
The moves by factors, as well as the withholding or withdrawing of recommendations to ship by credit analysts, were made because of a lack of information coming from the retailer, they said.
“We have to take this prudent step of withdrawing our recommendation to ship to Woolworth until we get a clearer picture of the situation,” said Stanley Markowitz, senior credit analyst at Ben Solo Credit Service.
At least one credit analyst reported that Woolworth had been running 30 to 60 days late on payments since the beginning of the year, but said he didn’t withdraw his recommendation to ship until after Wednesday’s announcement.
A Woolworth spokeswoman had no comment.
In another development, at least four shareholder suits were filed in Federal Court here, charging Woolworth executives with selling their stock in the company before the accounting irregularities were revealed.
In one suit, two shareholders contend that “while in possession of material adverse information about Woolworth, its lack of internal controls and its margins, Woolworth officers and directors sold Woolworth common stock” at prices far above Wednesday’s closing stock price.
The suit charges Woolworth executives with selling more than $1.4 million in common stock.
The largest stock sale, totaling 22,917 shares at $29.62 a share, for $678,801, was made by the company’s former chief executive officer, Harold E. Sells, in June 1993, according to court papers.
The most recent stock sale listed in the complaint was made by Frances E. Trachter, vice president of public affairs, who unloaded 3,000 shares on Feb. 10 at $24.25 a share for $72,750.
Henry C. Miner 3rd, also a vice president at the company, sold 9,318 shares between Jan. 19 and Jan. 21 at an average price of $25.50 for a total of $237,264, the suit said.
Charles T. Young, chief financial officer, cashed out 12,000 shares of the firm’s stock in late November 1993 at $22.50 a share for $270,000, court papers charge.
In addition to determining whether Woolworth executives sold stock at inflated prices, the suits seek unspecified damages and compensation.
The company said it is its policy not to comment on pending litigation.
Woolworth stock, which has a 52-week high of 31 1/2, closed Thursday on the New York Stock Exchange at 15 1/8, down 1 7/8, after dropping 1 point on Wednesday.