Macy delays paying its suppliers Action launches new worries about the retailer's future.

January 13, 1992|By New York Times

NEW YORK -- R.H. Macy & Co., which has been sorting through the aftermath of a disappointing holiday season, has told its suppliers that it will be late making its January payments, sending a shudder of concern through the retailing community and again calling into question the ability of the department store company to navigate through the difficult retailing climate.

In explaining the delay, Macy cited restrictions in agreements with several banks that require it to reduce its borrowing for a 30-day period ending Jan. 25. The company said it would resume regular payments after that.

In an interview yesterday, Myron E. Ullman 3rd, Macy's vice chairman, dismissed suggestions from suppliers and analysts that the announcement signaled that the company, which is shouldering $3.7 billion of long-term debt, was sliding closer to bankruptcy.

He said the company would soon outline a "comprehensive game plan" to reduce its debt, which he has described as Macy's biggest problem.

He said that plan, the details of which he declined to reveal, would alleviate worries about the company's financial health and put to rest persistent rumors of a bankruptcy filing. "It is certainly not in our interests to pursue that route, nor do we feel that's part of our game plan," Ullman said.

Suppliers who were waiting for money from Macy due last Friday called the accounts payable department at Macy's West Coast division, based in San Francisco, and were greeted with this recorded message: "You have reached Macy California accounts payable. For your information, we are meeting the technical clean-down provision of our bank agreements and sending out vendor checks on Jan. 25. The company's clean-down requirement ends at that time, and the full revolving working capital facility is once again available for the company's use."

People answering the phones in the accounts payable department for Macy's East Coast and Southeast operations gave callers the same message, suppliers said. Macy operates more than 140 stores, including the Macy's, I. Magnin and Bullock's department store chains as well as several small specialty store chains.

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