US Retai​l Mass Bankr​uptci​es 2009

[Mrs. Sharon B. Hodge]

US Retai​l Mass Bankr​uptci​es 2009

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CBS December 29, 2008 Retail Returns Amok - Extreme price slashing may not have helped retail outlets this year as returns are higher than ever reports Bianca Solorzano Chris Wragge talks to a retail expert about the holiday sales wrap-up


Linens 'N Things and other other names vanished this year, victims of the economy, the financial meltdown or other factors Experts say 2009 could mark the end of even more brands as the now year-long recession puts more struggling companies on life-support

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More top brands seen disappearing in 2009
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Many now on life support as the year-long recession persists

Associated Press
Jan 2, 2008

http://www. msnbc. msn. com/id/28452746/?GT1=43001

NEW YORK - Shoppers won't be picking up ornate lamps from the Bombay Co. in the coming year. Or investing with Lehman Brothers and Bear Stearns.
No flying to Hawaii on Aloha Airlines or buying ultra-cheap tickets on Skybus, either

All those names vanished this past year, victims of the economy, the financial meltdown or other factors.
Experts say 2009 could mark the end of even more well-known brands as the now-yearlong recession puts more struggling companies on life support

"I think 2009 is going to be a bloodbath," said Scott Testa, a marketing professor at St. Joseph's University in Philadelphia.
"I think it's going to be very, very ugly"

For some companies, 2008 was no beauty. The woes of the nation's retailers began before the year even started. The Bombay Co.
, known for its home accessories and furnishings, filed for bankruptcy last fall and shuttered the last of its stores in January because of slow sales — an ailment that hurt other companies as the economic downturn turned into a recession

The casualties weren't limited to retail. Travelers also bid adieu to some airlines in 2008 as jet fuel prices soared and consumer spending on extras like travel plunged.
Aloha, ATA, Skybus and Champion Air all grounded their planes

And two of the biggest names that disappeared this year took the economy and consumer confidence down with them

Bear Stearns was headed toward collapse in March, awash in massive losses from toxic securities tied to subprime loans, before the government engineered a fire sale of the 85-year-old investment bank to JPMorgan Chase & Co. And the credit crunch that paralyzed the world economy only got worse after Lehman Brothers, a 158-year old company that helped finance America's railroads, became the biggest bankruptcy in U.S.
history

The ripple effect those two failures had on the economy was evident at malls across the nation.
Consumers, already nervous about the falling value of their homes and the security of their jobs, curtailed their spending even more

With sales and profits dropping this year and lenders leery of granting new credit, a number of retailers failed. Home goods seller Linens 'N Things began liquidating its stores after originally filing in May for Chapter 11 bankruptcy protection. Apparel chain Steve & Barry's did the same later in the year. Catalog retailer Lillian Vernon Corp. and specialty retailer Sharper Image Corp. also vanished.
KB Toys is in the midst of restructuring its business and is liquidating its more than 400 stores

Of all the brands to disappear in 2008, Testa said, consumers may miss department store chain Mervyns the most since so many shoppers had a connection to the store

"That's a brand that's been around for a very long time," he said

Mervyns, which had been operating for five decades, said in October that it would have to liquidate its stores after filing for bankruptcy protection this summer

The store's faithful shoppers will likely seek out new places that have the brands and prices they want — or may just stop spending if they don't find a replacement that resonates with them as much, said Rita Rodriguez, chief executive for the U.S.
division of The Brand Union, a firm that helps companies create brand identities

Read The Rest HERE


December 30, 2008 - Consumer confidence at lowest-ever level; Home prices drop to record low; Treasury gives $5 billion to GMAC; Airbus meets key goal




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Holiday Sales Drop to Force Bankruptcies, Closings
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Bloomberg
By Heather Burke
12-29-08

http://www. bloomberg. com/apps/news?pid=20601087&sid=ajAqMbszJ...

U.S.
retailers face a wave of store closings, bankruptcies and takeovers starting next month as holiday sales are shaping up to be the worst in 40 years

Retailers may close 73,000 stores in the first half of 2009, according to the International Council of Shopping Centers. Talbots Inc. and Sears Holdings Corp.
are among chains shuttering underperforming locations

More than a dozen retailers, including Circuit City Stores Inc., Linens ‘n Things Inc., Sharper Image Corp. and Steve & Barry’s LLC, have sought bankruptcy protection this year as the credit squeeze and recession drained sales.
Investors will start seeing a wide variety of chains seeking bankruptcy protection in February when they file financial reports, said Burt Flickinger

“You’ll see department stores, specialty stores, discount stores, grocery stores, drugstores, major chains either multi- regionally or nationally go out,” Flickinger, managing director of Strategic Resource Group, a retail-industry consulting firm in New York, said today in a Bloomberg Radio interview.
“There are a number that are real causes for concern”

Sales at stores open at least a year probably dropped as much as 2 percent in November and December, the ICSC said last week, more than the previously projected 1 percent decline. That would be the largest drop since at least 1969, when the New York-based trade group started tracking data. Gap Inc. and Macy’s Inc. are among retailers that will report December results on Jan.
8

Women’s Clothing, Electronics

Consumers spent at least 20 percent less on women’s clothing, electronics and jewelry during November and December, according to data from SpendingPulse

Retail Metrics Inc.’s December comparable-store sales index will drop an estimated 1.2 percent, or 5 percent excluding Wal- Mart Stores Inc.
Retailers’ fourth-quarter earnings may fall 19 percent on average, the seventh consecutive quarterly decline, according to Ken Perkins, president of Retail Metrics, a Swampscott, Massachusetts-based consulting firm

Probably 50,000 stores could close without any effect on consumer choice, Gregory Segall, a managing partner at buyout firm Versa Capital Management Inc., said this month during a panel discussion held at Bloomberg LP’s New York offices.
Only retailers with healthy balance sheets will survive the recession, according to Matthew Katz, a managing director at consulting firm AlixPartners LLP

Store Closings

The ICSC predicts, using U.S. Bureau of Labor Statistics data, that 148,000 stores will shut down in 2008. That would be the largest number since 151,000 closings in 2001, during the last recession, according to ICSC Chief Economist Michael Niemira. The total number of retail establishments will decline by about 3 percent this year, also taking into account locations that were opened, he said. The U.S. had 1.
11 million retail locations in 2002

Another 73,000 locations may shut their doors in the first part of 2009, Niemira said

The U.S. economy shrank in the third quarter at a 0.5 percent annual pace, the worst since 2001, according to the Commerce Department.
Economists surveyed by Bloomberg in the first week of December forecast the world’s largest economy will contract through the first half of 2009

The Standard & Poor’s 500 Retailing Index has shed 34 percent this year, with only two of its 27 companies rising

The index doesn’t include Wal-Mart, the world’s largest retailer, which fell 24 cents to $55.11 at 4:02 p.m. in New York Stock Exchange composite trading.
Wal-Mart shares have gained 18 percent this year

Discount Advantage

“If you’re going to be in retail right now, the discount space is where you want to be,” Patrick McKeever, a senior equity analyst at MKM Partners LLC, said today in a Bloomberg Television interview

Discounts of 70 percent or more by Macy’s, AnnTaylor Stores Inc. and other retailers failed to prevent a spending drop of as much as 4 percent during the final two months of the year, according to data from SpendingPulse.
Retailers’ pricing models are being challenged by consumers, according to Richard Hastings, consumer strategist at Global Hunter Securities LLC of Newport Beach, California

“The whole pricing system is becoming an old-fashioned bazaar,” Hastings said today in a telephone interview.
“They’re going into the stores and they’re looking at the stuff and they’re saying ‘You know what? I know that that price is way too high,’ and they have figured out that the signage doesn’t mean that much”

Retail bankruptcies may help the industry in the long run, according to Flickinger

“We’ll be going from a Dickens-esque worst of times this December to the best of times in future Decembers because we’ll rationalize out all the redundant retailers and retail space in shopping centers,” Flickinger said

To contact the reporter on this story: Heather Burke in New York at [e-mail]



December 24, 2008 - Retailers Bracing for Cash Crunch, Small Regional Department Stores Most at Risk; Bon-Ton Sales May Fall 5%; Finlay Jewelry May Not Have Cash to Finance Operations