HAYWARD — Mervyns is facing a financial squeeze that imperils shipments to the struggling retailer and leaves the company's prospects murky amid a sluggish economy, industry insiders said Monday.

Some vendors for Hayward-based Mervyns, a mid-priced retailer, are believed to be delaying shipments, according to reports from analysts and executives. Privately owned Mervyns operates 177 stores, including 129 in California, said Roy Berces, a Mervyns spokesman.

"We are telling our clients to hold all shipments to Mervyns," said Bob Carbonell, chief credit officer with South Plainfield, N.J.-based Bernard Sands LLC, a credit monitoring firm.

Those clients include apparel companies and specialized financial companies called factoring firms, he said.

"Mervyns has been a troubled retailer for several years," said Paul Buxbaum, chairman and chief executive of Buxbaum Group, a retail inventory appraiser and liquidator based in Agoura Hills. "They are struggling with the credit communities."

A delay or halt in shipments would crimp Mervyns just ahead of a crucial part of the sales year.

"It's getting to be back-to-school time," Buxbaum said. "They have fourth-quarter needs."

The warning was issued to suppliers and other vendors for Mervyns because the retailer's management last communicated with credit-monitoring company Bernard Sands, vendors and factoring companies July 7, Carbonell said.

"It's because of a total lack

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of communication with Mervyns' management," Carbonell said.

Vendors and the credit community had been expecting to receive regular financial reports and telephone or e-mail contacts from Mervyns, Carbonell said. But those ceased July 7.

Sun Capital Partners and other private equity firms bought Mervyns from Target in 2004 for $1.2 billion.

"There is nothing to really comment on at this time," Mervyns spokesman Berces said. Alex Stanton, a spokesman for Boca Raton, Fla.-based Sun Capital, would not comment.

Levi Strauss & Co. would not discuss the details of its shipments to Mervyns. Levi Strauss provides Dockers and Levis jeans to Mervyns, according to Levi spokesman E.J. Bernacki.

"We have enjoyed a long business relationship with Mervyns," Bernacki said. "We hope and expect that will continue."

Some analysts were baffled that Mervyns has veered into these financial shoals. George Whalin, president of Carlsbad-based Retail Management Consultants, said the current economic slump should favor retailers such as Mervyns.

"They have moderately priced goods," Whalin said. "They should be doing well in this environment."

Whalin also was surprised that Mervyns is in a funk because it is backed by well-heeled private investment firms.

"The owner should not let this happen unless they intend to let it go down the tubes," Whalin said.

Some analysts believe the private investors bought Mervyns primarily because they hungered for the real estate properties that contained the Mervyns stores. The secondary interest by the buyers was in the retail operations. Sun Capital spokesman Stanton would not comment about this potential strategy.

Following the purchase, Sun Capital and its partners sold numerous properties with Mervyns stores. One of the biggest deals was the 2007 transaction in which Macerich Co. paid $430 million to buy 43 Mervyns store buildings.

In May, Mervyns said it had hired DJM Realty to sell five to 10 under-performing Mervyns stores that were at sites with high real estate value. Mervyns at the time estimated the sale of the properties could fetch $25 million to $50 million. The cash would be used to fund operations and new growth initiatives.

These initiatives were the latest elements of a new strategic plan that was fashioned by John Goodman, chief executive officer of Mervyns. Goodman joined Mervyns in April. He previously was president of Levi Strauss' Dockers brand.

"We have a plan that centers around our consumer and her needs, and we are putting the capital and people resources behind it to not only overcome the current difficult retail climate, but to gain market share and reinvigorate the Mervyns brand," Goodman said.

George Avalos covers jobs, economic development, commercial real estate, finance and oil companies. Reach him at 925-977-8477 or gavalos@bayareanewsgroup.com