Some lenders who finance retail vendors are getting skittish about the holiday prospects for luxe chains Neiman Marcus, Bergdorf Goodman and Barneys New York, The Post has learned.
The lending companies, who supply credit to allow the suppliers to make the shirts, pants, shoes and other items, have started to ask their clients for a surcharge of up to 2 percent on shipments to those chains, sources said.
The suppliers, while not happy about the added cost, which will cut into their profits, have nonetheless agreed to the terms, sources said.
The surcharges are like an insurance policy in case the chains run into choppier financial waters.
While most suppliers will keep doing business with the chains, the surcharge “is a statement” of jitteriness, one supplier told The Post.
The clampdown by the lenders, known as factors, comes as fears about the luxury sector have grown.
“We are fully supporting the Neiman Marcus Group and we are approving all orders,” said Gary Wassner, CEO of Hilldun Corp., a factor. “But the shifting marketplace for retailers today has increased the risk assessment, and thus the credit community has imposed surcharges.”
“Luxury retailers are suffering the same market conditions as everyone else,” said a source at a second factor. “The problem [with these specific chains] is their debt load.”
Neiman Marcus reports earnings next week, and is expected to say operating profits are down 20 to 25 percent compared with the year-earlier period, a Neiman lender told The Post.
At such a reduced level of profitability, Neiman Marcus will be about breakeven after making debt payments, the lender said.
Neiman Marcus has basically no positive cash flow, and almost $5 billion in loans.
“The company is not worth the debt,” the lender said.
Neiman Marcus’ loans are trading at 79 cents on the dollar, and its different classes of bonds sell from 48 cents to 55 cents on the dollar, the lender said.
The debt is trading near their historically low levels.
In fact, the bonds in December were selling for 80 cents before falling in the last six months by 30 percent to their current level, the lender said.
Neiman has $450 million remaining on a $900 million revolving line of credit, and no maturities until 2020, so it has time to reverse its sagging fortunes, the lender said.
Barneys does not report public earnings, but is believed to have financial issues, the lender said.
Lenders are not assessing the extra fee on orders for Saks Fifth Avenue, a luxury department store owned by Hudson’s Bay Company, sources said.
Neiman Marcus and Barneys did not return calls.