An interesting article from ABC 15 in Phoenix notes liquidation sales aren't always a great deal. The sales are often conducted by a liquidator, not the original retail store; as a result, prices are reset to new profit expectations. Discounts are off manufacturer's retail price or even specially marked up prices, rather than the previous retail price. ABC 15's investigators found items at Linens 'n Things priced 12% above their original level and Circuit City TVs $200 more expensive than at Best Buy. Caveat emptor.
November 2008 Archives
Retailers and economists watched Black Friday with nervous anticipation as consumers began their holiday shopping. (The Times also reported Friday on the striking product discounts in effect at many retailers.)
The New York Times reported typical crowds with fewer bags--an unnerving start to the season. More unnerving was the Wal-Mart employee trampled to death in a 200-person stampede for discounts. Four other people were injured in the melee, including a pregnant woman who reportedly lost her baby. (This author is not going to speculate on whether the frenzy was related to the economy.)
With remarkable coincidence, the blog It Died launched alongside Timely Demise yesterday. Glenn Fleischman is writing "a compendium of what services and companies are no longer available for our Internet pleasure and use." It's a great companion read to this blog and I wish Glenn much success. (See also the It Died post about Timely Demise.)
Charming Shoppes, the parent company of Fashion Bug, Lane Bryant and Catherine's Plus, is closing 100 stores, bringing to 250 the number of outlets it is shutting. The company hopes to achieve cost savings in excess of $100 million. Most of the closings will be Fashion Bug outlets but the other names will be affected. Same-store sales at all three lines are down significantly this fall.
Retailer BTWW is beginning liquidation of all its stores. BTWW, which operates apparel stores in the midwest and west such as Western Warehouse and Boot Town, filed for bankruptcy earlier in the month, and hopes to use the holiday season to clear out inventory. BTWW had poorly performing stores, significant debt and failed attempts at restructuring before succumbing to its bankruptcy filing. The company was established in 1975.
Eclipse Aviation, a pioneer in the ultra-light jet segment, filed for Chapter 11 protection today after failing to raise capital in the current economy. The company was using bridge loans and reduced output to preserve its business, and had not achieved profitability. It also had lawsuits pending from customers angry at Eclipse for raising the price of its jet prior to delivery.
Eclipse must be particularly disappointed with its timing, as the European Safety Agency approved the Eclipse 500 for sale in 37 European countries this past Friday. The company's CEO was hopeful that the certification would improve its ability to secure funding.
After several months of test posts and practice runs, Timely Demise is proud to make its public debut, just in time for Black Friday and the holiday season.
This blog is designed to track changes to the U.S. retail landscape as the country suffers through a remarkable market cycle. Timely Demise will cover store openings and closings, manufacturing shifts, company sales, bankruptcies, liquidations, and other alterations to American retailing. Specifically, the blog is focused on moves that impact consumers.
What this blog does not specifically track are machinations that are strictly financial and structural. Layoffs, debt restructurings, stock buybacks and the like are not the focus. You'll notice, for example, that this page has yet to mention the auto industry--because the Big Three, while running scared, have not altered their business structures in a material way. When General Motors shuts down Pontiac and its dealer network, that will be a Timely Demise topic of interest.
As mentioned in this blog's initial post, this site is not being run with malice or negativity whatsoever. Your host--who works with many companies that sell products--is simply fascinated by the tangible effects of the shifting ground under America's retailers.
The test period has been a busy one, as evidenced by the archives at right. Expect a fairly slow news cycle between Thanksgiving and Christmas, as retailers focus their efforts on shoring up holiday sales before closing stores and selling business units, and a lot of news early in 2009.
Check here daily for store news as it affects all of us.
Lenox Group, the maker of tableware and gifts, filed for Chapter 11 bankruptcy today. The company is trying to sell itself and expects to continue operations during the bankruptcy process. CEO Marc Pfefferle insisted that the company is "fundamentally sound" and "conducting business as usual," but that it had been overwhelmed by debt problems and current market conditions.
Perhaps none of these will heavily affect consumers, but a lot of filings came over the wires yesterday:
- DayJet, a regional airline that closed up shop, filed for Chapter 7 liquidation
- CPG Marketing, which processed rebates for third-party companies, filed Chapter 11 with heavy outstanding liabilities
- Beaudry RV, a regional dealership, caught without money to repay debts
- Getrag, transmission manufacturer (but it seems only for one plant)
Despite a private equity buyout earlier in the year, Steve & Barry's stores will be selling all merchandising and closing the entire business in the coming months. The chain previously announced more than 100 store closings but was planning to run 173 existing stores. A lack of financing for continuing operations, caused by soft sales, resulted in the about-face. Affiliates of the new owners filed for Chapter 11 bankruptcy protection Wednesday.
Weekend reading: Regional website AZbiz.com published an excellent summary of retailers' movements. Among the notable items not already covered in this space:
- Ann Taylor, closing 117 of 959 stores
- Charming Shoppes, closing roughly 6% of stores
- Disney Store, closed 98 outlets after a corporate reacquisition
- Friedman's/Crescent Jewelers, liquidated 377 of 565 doors
- Sigrid Olsen, completely closed by parent Liz Claiborne
- Wilsons Leather, closed most of its stores while planning a new concept for the rest
Sears is expanding its store closings by 50% for 2009. The legendary department store will shutter 19 doors this winter. This article notes sister store Kmart has been slowly closing stores for some time, which is part of CEO Ed Lampert's strategy to maximize real estate value more than a reflection of market conditions.
Parcel delivery service DHL announced on Monday it is ending its domestic shipping business due to U.S. market conditions. The company, a division of Deutsche Post, is refocusing on international shipping, five years after purchasing competitor Airborne to increase its American footprint.
As much as this decision was influenced by current market conditions, it also underscores an old Jack Welch principle: if a business does not occupy the No. 1 or 2 position in the market, the business may not be viable. DHL (and Airborne) were distant competitors to FedEx and UPS.
The economic slowdown affects family-run, local businesses as much as it shakes publicly traded companies. A pair of long-time retailers announced closings this week:
- Bixler's Jewelers, in Easton, Pa., after 223 years in business
- Zim's, craft supplier in Salt Lake City, Ut., after 62 years
- And a public company, Harold's Clothing, which has operated since 1948 and filed for Chapter 11 bankruptcy on Nov. 7. The chain will be closing all stores and liquidating assets.
Furniture maker La-Z-Boy is closing 15 to 20 stores, laying off employees and cutting back spending in "response to slumping sales." Store closings will occur between now and March. The company has no concerns about its long-term financial health.
Ending a common topic in this space, Circuit City filed for Chapter 11 bankruptcy protection Sunday. The company notes in a subhead of its press release that it is "fully operational and open for business." Excluding the rash of store closings, I suppose.
Many large retailers are announcing cutbacks in store openings for 2009. Staples is planning to limit capital spending and reduce store openings by by 30% next year, while Coldwater Creek revised its 2009 store openings plan to 15 stores rather than 40. Other retailers will be considering similar approaches, which will be noted in this space as they are announced.
Yesterday's industry-wide retail news was incredibly bleak--so much so that the nation's leading newspapers reached for uncommon adjectives to describe it.
- The New York Times: "remarkable slowdown"
- The Wall Street Journal: "dismal"
- Washington Post: "brutal"
- Los Angeles Times: "awful"
Among the reports:
- Neiman Marcus -28% (WSJ: "staggering") including a 23% online and catalog decline
- Abercrombie & Fitch -20%
- Saks Inc. -17%
- Gap -16%
- Nordstrom -16%
- J.C. Penney Co. -13%
- American Eagle -12%
- Kohl's Corp. -9%
- Limited -9%
Saks Incorporated, parent company of the Saks Fifth Avenue chain, is discontinuing its Club Libby Lu girls' store operations. Club Libby Lu, aimed at girls 4 to 12 years old, had both standalone stores and outlets in Saks locations. The closure is not out of line for Saks, which has been streamlining its business holdings for several years to focus on its core brand.
Major pharmacy chains are making major moves as the economy shifts.
Walgreen is undergoing a substantial restructuring in order to trim costs. The Wall Street Journal reported last week plans for the chain to overhaul much of its business--suppliers, jobs, stores and pharmacies--to improve performance. Among other initiatives, it hopes to centralize prescription processing to aid its pharmacists and reduce expenses.
Meanwhile, CVS is launching its upscale beauty store concept, called Beauty 360, in Washington DC this week. The store-within-a-store includes premium and niche beauty brands and personal services like manicures and facials. Beauty 360, which was announced in August, probably began its planning in 2007 or 2006, long before the credit crisis. The retailer is committed to the concept and is looking to open as many as 50 pilot stores with the upscale merchandise.
As anticipated last month (and noted here), Circuit City confirmed store closings and is scaling back expansion plans while renegotiating leases. Some industry observers are already saying goodbye to the retailer, saying that it has too many negative positions to rebound.
A PDF of the store closings is available, listing all 155 affected locations.