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Crisis at Mervyns: Credit Concerns Mount Over Economic Woes
Lenders and credit analysts are jittery about the future of Mervyns, the $2.5 billion moderate-price regional department store chain.
Industry speculation focused on the possibility of a bankruptcy filing.
Mervyns, based in Hayward, Calif., has been hurt by the housing implosion in that state, and its core customers are being squeezed by rising gas and food prices, job cuts and tight credit.
"We are currently advising all clients to hold orders," Bob Carbonell, chief credit officer for Bernard Sands, a credit-checking firm, said Friday.
A Mervyns spokesman declined to comment.
Credit sources said the factoring arm of GMAC Commercial Finance has stopped approving orders of goods to the chain, which has 177 stores in seven Western states. An executive at GMAC declined comment.
In May, the factoring division of CIT stopped its approval of orders for Mervyns. That left a few factoring firms, which provide finance and credit to apparel manufacturers and take on the risk of payment for client accounts, still checking credit terms. GMAC was among them, as were Wells Fargo and Millberg Factors on a few orders. Slowly, however, the factors have chosen to advise clients not to ship.
"We are currently advising all clients to hold orders."