Apparel designers large and small can breathe a sigh of relief as the owner of struggling Barneys New York has decided to pump additional capital into the chain, The Post has learned.
The cash, believed to be a minimum of $10 million, will pay down revolving credit and free up some cash, sources said.
That should give the owner, Istithmar World Capital, the Dubai sovereign wealth fund, more time to ride out the recession.
Istithmar paid $950 million for Barneys in 2007, when it seemed there was a never-ending rising demand for luxury goods. But the worst financial crisis since the Great Depression has hit even the Louboutin-heeled folks who frequent the store.
As a result of falling sales, Barneys, which still has no CEO, recently slashed 76 jobs and is facing a credit crunch from the factors that finance inventory from its vendors. One factor, Hilldun, has not approved shipments to Barneys for six weeks.
“As far as I know, no factors are approving them,” said Hilldun’s president Gary Wassner. “To date they have not provided information or satisfied credit community requirements to start approving again.”
A cash influx will demonstrate Istithmar’s willingness to keep supporting both retailers — and buy time to try to recoup the inflated purchase prices.
“They have to pump more money in — if they go bankrupt what is it worth, zero?” said Howard Davidowitz, chairman of Davidowitz & Associates Inc., a retail consulting and investment banking firm.
Istithmar, which also owns the ailing Loehmann’s chain, is expected to put some of the cash into the off-price chain. It did not respond to requests for comment.