Byline: Valerie Seckler

NEW YORK — For the broad middle-market women’s apparel industry, bankers serving this market say the odds are business will improve only slightly in 1995.
Despite pockets of strength such as dresses and intimate apparel, they say, companies with sales of $20 million to $100 million will likely continue to lag behind an overall economic rebound.
The year’s wild card — interest rates — could be a big negative come spring, if another widely anticipated hike dampens consumer confidence and spending. And the growing centralization of retail power, some bankers note, only adds to the difficulties of these middle-market suppliers.
Anthony K. Brown, managing director at the Trading Alliance Division of MTB Bank here, voices modest optimism about the prospects for women’s companies next year, “provided that the interest-rate hikes don’t have too much of the desired effect; if people don’t look into their credit-card statements and decide to tighten their belts.”
Making the sledding tougher still for middle-market firms, say bankers, was the continuing consolidation of retailers — which, in turn, was expected to spark mergers among small to medium resources.
“There’s lots of merger activity out there; smaller companies banding together to cope with the consolidation at retail,” observes Don Gibson, midmarket executive for apparel and textiles at Chase Manhattan NA. He noted such deals often stimulated demand for bank loans.
Gibson is forecasting real growth of 2 to 3 percent next year for all of apparel retailing, but predicts retail sales of women’s apparel would expand only 1 to 2 percent or remain flat with 1994.
“There’s some validity to the notion that consumers will buy more nondurables as durables purchasing slows,” adds Gibson, “but that won’t necessarily be apparel. I don’t see the kind of growth you normally find breaking out of a recession.”
Gibson says he expects flat results to modest gains in women’s apparel business and adds, “You may not see that in units; you may see it more in price increases.”
Noting women’s apparel “hasn’t benefited from any uptick in the economy thus far,” Tony Scarpa, senior vice president and head of midmarket lending at Chemical Bank, predicts, “The women’s business will continue to struggle next year. It’s going to be spotty for the apparel world in 1995.”
Among the hot spots Scarpa did foresee were intimate apparel, which he says was “coming back;” the dress business, which was “picking up a bit,” and sports-related activewear.
“I think the women’s companies are still trying to figure out how to deliver winning career apparel — the role Liz Claiborne once filled — and sportswear,” he adds.
The supply of loans was plentiful, bankers report, with more dollars chasing fewer firms than in recent years.
Outside of the loans merger activity might stimulate, bankers note the need to borrow has diminished, because as women’s apparel companies have better managed inventories and receivables, they’ve improved their cash positions. Also, sluggish retail sales and an industry increasingly comprising fewer, larger merchants has slowed the growth of many vendors, further depressing their need for loans.
“I think the banks are flush and anxious to make loans,” remarks Lissa Baum, senior vice president of Israel Bank of New York. “The banks are undercutting interest rates to get better quality customers. Most of the surviving apparel companies are better operators; they’re very liquid and…the need to borrow isn’t what it used to be.”
Agreeing that the loan supply was “definitely there,” Scarpa says, “There’s been an uptick in demand, but I don’t anticipate a surge.”
James Lawrence, president of Merchants Bank of New York, notes, “Apparel companies are all playing it closer to the vest. There has to be a major pickup in retail business for them to expand and want to borrow money.”
While crediting vendors’ improved management of sourcing, distribution and infrastructure, in part, for the overall softening in demand for loans, Gibson says Chase still had a record year lending to apparel and textile firms, and 1995 “could match it.”
“The bank’s total lending commitment to the textile and apparel industries is over $1 billion,” he says, “and we’re experiencing growth in excess of 10 percent.”
For Chemical, Scarpa projects a 4 to 5 percent uptick in loans to all its apparel clients next year, but he says growth in lending to women’s firms “may be weaker.”
The bank “booked several hundred millions of dollars worth of new apparel business in 1994,” he adds.

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