Regional jeweler Christian Bernard filed for Chapter 7 bankruptcy the day after Christmas. The company began its bankruptcy investigations prior to the holiday, and the filing says the chainlet's 15 stores "appear to be unsustainable."
December 2008 Archives
Parent Company, the online toy retailer and, er, parent company of eToys and other stores, became the first notable holiday season retail casualty when it filed for Chapter 11 bankruptcy Monday. The company, which has had numerous ups and downs since the end of the dot-com boom, called the filing "unfortunate but necessary."
Limited connectivity, so one post:
Bloomberg report: holiday slump to force closings and bankruptcies; expect a lot of activity in February
Lincoln Logs, an upstate New York home manufacturer (not the toy), to be sold at auction following a failed reorganization
DHP Holdings, parent of Desa Heating, filed chapter 11, plans to wind down operations
Well, at least one thing is consistent in the recession: the New York Yankees can still spend with abandon. With their signing of first baseman Mark Teixeira to an eight-year, $180 million contract, the Yanks now possess the top four highest-paid players in baseball, at a total commitment of more than $800 million.
Unlike, say, Goldman Sachs, these salaries don't get absorbed by management fees; the costs are, in part, passed to consumers. To that end, the Yankees--who recently sought $350 million in public financing before spending $421 million on free agents--are raising ticket prices for next season. The price increases reflect the new Yankee Stadium, which is nearing completion, as well as the player expenses. Nearly half the stadium now costs more than $45 a ticket.
Shoppers bring haggling skills to the mall, Boston.com/AP. Retailers are bending their own rules this season to secure sales. Asking for a better return policy, price match, or just a lower bottom line--all have become acceptable in the right situations. This is a stark shift from corporate policy, although for many consumers, it's not much different than simply waiting for an item to go on sale.
Flying J cited a cash shortage in a Chapter 11 filing Monday, brought on by the steep decline in oil prices and tight credit markets. Flying J, which has 250 service and travel stations nationwide, is one of America's largest privately held companies. The company plans no change in operations during the reorganization.
Op: One would think that declining oil prices would not have a material effect on a service station--indeed, the lay person figures it could help, not hurt, margins, since the stations could lower prices more slowly than the futures market. But if Flying J secured its oil at too high a price, and competitors with better buying can lower prices faster, this wipes out profitability.
Interesting corollary impact to the economy: Albany's largest dry cleaner has experienced a "dramatic downturn" in revenue and has filed for bankruptcy. "We're seeing clothes dirtier than they used to be," said CEO B. Robert Joel. Rising energy costs coupled with declining consumer traffic combined to create a significant shift in the business. Four of the chain's 14 locations will be closed.
Some interesting reading this weekend from two major newspapers.
Barron's: Struggling to Survive at the Mall. Summarizes a lot of what we've been seeing this season, and reports on a wide range of brands and department stores. Since it's Barron's, each company comes with a stock price evaluation as well.
New York Times: Handful of Niche Chains Stay Alive in Retailing. The teen market is doing better than most this season, particularly at Urban Outfitters, and other retailers (like Kohl's and Aeropostale) are well-positioned to weather the recession.
Resturant chain Ruby Tuesday is responding to a decline in sales by closing 70 stores. Forty of the outlets will close by March; others will be closed over time, and some excess property is for sale. Ruby Tuesday operates nearly 1000 restaurants overall, most of them company-owned.
Paige Restaurant Group filed for Chapter 11 bankruptcy this week to escape its leases. The filing was done to get the restaurant Honey out of its space in the Meatpacking district. The group, which also owns The Hill, Dune Southampton and The Event Space, is reporting otherwise steady business.
KiS Golf, which operated indoor golf facilities in six states, converted from Chapter 11 to Chapter 7 bankruptcy this week and is liquidating assets. The shift in plans surprised many people, including irate customers with pricy membership plans.
U.S. consumer prices dropped by a record 1.7% in November as the economy struggled with the immediate effects of the financial crisis. Economists keep a keen eye on prices; a steady decline creates deflation, which discourages consumer spending as people wait for prices to drop. This could have very real effects on the average shopper's in-store experiences, although this writer, who paid $1 for M&Ms from a newsstand yesterday, hasn't seen it yet.
Safeway is investigating new locations and plans to open 36 stores in 2009, taking advantage of the depressed real estate market. CEO Steve Burd cites "extraordinary opportunities" for aggressive buyers right now.
Similarly, Aldi is expanding in the Dallas-Ft. Worth area. The discount grocer is adding as many as 25 new doors in the next 18 months, spurred on by strong sales as consumers look for bargains.
And Tops Markets is growing by up to 10 stores in upstate New York while investing $150 in capital improvements to existing locations.
Industrial news, but
two in one day four this week: Kongsberg Automotive is closing a plant in Ohio and Special Devices filed for bankruptcy. Special Devices, which makes a variety of technical components, cited the downturn in automobile sales; Kongsberg is restructuring.
Update: there were more of these than previously noted. Auto supplier Precision Parts International, which makes metal componentry, filed for Chapter 11 bankruptcy and is planning liquidation; and plastic parts maker Key Plastics also filed for Chapter 11, but plans to reorganize.
A moment of editorializing: if the market were able to signal for or against an auto industry bailout, these manufacturers are a sure sign in favor of one. The United States has hundreds of companies like the ones above who may fall in a real-world domino effect should America's car companies file for bankruptcy and wipe their credit slates clean. This author had not been in favor of industry aid, but posts like this give pause.
San Diego restaurant chainlet Boll Weevil closed all six company-owned locations and is filing for bankruptcy. The company, which dates to 1967, once had 19 restaurants. Boll Weevil had a history of financial trouble, including two previous bankruptcy filings and an insurance incident in 1997 that temporarily closed a dozen doors. This is the last go-round, however; the company plans a liquidation under Chapter 7 law.
Regional menswear chain S&K is closing 58 stores, 30 percent of total, and has put its headquarters up for sale as part of a restructuring plan. The company cited difficulties in the current retail economy as a major factor within a long-term initiative to cut costs.
Hey, how about some good news? Forever 21 and Kohl's made a joint acquisition of 46 former Mervyn's stores. Fifteen of the locations will become Forever 21 stores and the other 31 will turn into Kohl's. Kohl's is maintaining its plan to open 50 new stores in 2009.
Wholesale inventories fell a substantial 1.1 percent in October, the most since late 2001 following the September 11 attacks and dot-com slowdown. Sales by wholesalers dropped a record 4.1%. This points to lower production levels in 2009 and businesses trying to realign inventories to match lowered consumer spending.
Regional auto rental company Advantage Rent A Car filed for Chapter 11 bankruptcy protection and is closing around 70 percent of its locations. The company, which once had 140 locations and 24,000 cars across 12 states, will be down to ten locations following the restructuting. Advantage is also drastically reducing staff at its headquarters.
Toy retailer KB Toys filed for bankruptcy today, citing a "sudden and sharp decline" in sales. The liquidity crisis is specifically cited as a factor in the filing. The company, which has been around since the the 1920s, also went bankrupt in 2005.
Update: as part of the filing KB is specifically planning on closing all its stores.
The 58-year-old Baltimore Opera filed for Chapter 11 bankruptcy Monday and canceled its entire season. The opera, which has been struggling, also canceled contracts for three productions in next season's plans. The company faced a cash shortage and emergency financing guarantees in the weeks leading up to the bankruptcy filing.
Office Depot announced it is closing 126 stores and six distribution centers to offset declining demand in the difficult economy. The retailer is halving its planned store openings for 2009 as well, from 40 to 20.
It's a slow retail news week, so let's make note of the factory employees of Republic Windows and Doors, who spent the weekend and Monday in their factory after the company announced a rapid facility shutdown last week.
Republic, which has been in business since 1965, gave its employees three days' notice that their jobs would be eliminated. In response the staff, which in unionized, began an impromptu sit-in to protest the short notice. The company says it has no credit with which to make severance and vacation payouts; the employees refuse to leave without getting what they are owed. Negotiations were to resume last night.
Flooring product retailer iFloor filed for Chapter 11 bankruptcy and trimmed staff by 60 percent. The company, which operated 35 stores in addition to an ecommerce presence, fell short in fundraising efforts. iFloor is selling existing inventory and assessing whether the company can continue to operate.
The economic slowdown affects family-run, local businesses as much as it shakes publicly traded companies. A pair of long-time establishments announced closings this week:
- Modern Metal Products, an auto parts supplier dating to 1946, filed for Chapter 11 bankruptcy. The company expects to shut down; it found a willing buyer, but the buyer was able to arrange financing to complete a sale.
- John Wilson Sporting Goods, a Cedar Rapids-based retailer also in business since 1946, is closing its doors at the end of the year. Current economic conditions prohibit the owner from signing a new lease. Sadly, owner John Wilson is quoted as saying, "I can't see somebody wanting to start a locally-owned sporting goods store."
Late to post, but pleased to note: Timely Demise was cited by the Wall Street Journal as a leading-edge indicator of the current blog scene. Although, as Glenn Fleishman noted on It Died: "Sad, really."
Timely Demise (and It Died) also appeared on AllThingsD last weekend. Thanks to both for the mention.
Women's clothing retailer B. Moss joined the list of Chapter 11 retailers with a filing Tuesday. The company, nearly 70 years old, has stores in 19 states. B. Moss hopes to begin going-out-of-business sales this weekend and close most of its 70 stores by the end of the year. A potential sale fell through earlier in the year.
Bally Total Fitness filed for bankruptcy today with more than $1 billion in debt and more than 100,000 creditors. The high debt made financial maneuvers difficult in today's economic climate. This is the second bankruptcy for Bally in 14 months. The filing does not address fitness center operations.
This one's interesting: La Redoute, a globally distributed women's clothing retailer, is closing its website December 16. The company operates a web-and-catalog business in the United States through Redcats USA. I'm unable to find news about the closing, but the site's home page indicates a final liquidation sale (see screenshot).
Here's the "interesting": La Redoute on a corporate level is refocusing on its Internet business, with a restructuring plan that includes closing 81 outlets and ceasing its mail-order catalog. The company's online focus must not include the US market.
It's harder to quantify the retail impact of a company closing a factory, but a shuttered plant certainly affects product supply and consumer spending, so it's worth noting the numerous shutdowns announced this week:
- Shaw Industries is closing a fibers facility in South Carolina that makes products for rugs, carpeting, laminate and other uses.
- Aluminum recycler Aleris is shutting a factory in Indiana that has been idle since March.
- In North Carolina, Vaughan-Bassett is closing a plant used for furniture production, citing a dramatic decline in sales this fall.
- Super Steel in Schenectady, which made train components, is closing in early 2009.
These are all fairly small closings (the biggest will affect 400 people; the main auto workers' union has 139,000 members), but they point to cautious companies and lower consumer spending from the recession.
Poultry producer Pilgrim's Pride filed for Chapter 11 bankruptcy today in a move widely expected by financial analysts. Pilgrim's Pride has suffered a double-whammy of increased costs (for feed) and reduced demand from restaurants, which has thrown off the company's supply curve.
Pilgrim's Pride has already secured temporary financing and plans to continue operations while restructuring.