shit hitting fan: Retailing Chains Caught in a Wave of Bankruptcies

[spanone]

The consumer spending slump and tightening credit markets are unleashing a widening wave of bankruptcies in American retailing, prompting thousands of store closings that are expected to remake suburban malls and downtown shopping districts across the country.

Since last fall, eight mostly midsize chains — as diverse as the furniture store Levitz and the electronics seller Sharper Image — have filed for bankruptcy protection as they staggered under mounting debt and declining sales.

But the troubles are quickly spreading to bigger national companies, like Linens ‘n Things, the bedding and furniture retailer with 500 stores in 47 states. It may file for bankruptcy as early as this week, according to people briefed on the matter.

Even retailers that can avoid bankruptcy are shutting down stores to preserve cash through what could be a long economic downturn. Over the next year, Foot Locker said it would close 140 stores, Ann Taylor will start to shutter 117 and the jeweler Zales will close 100.

http://www.nytimes.com/2008/04/15/business/15retail.html?hp=&pagewanted=print

[Brigid]

1. No recession here.

No, indeed. Move along, folks. Nothing to see here. :sarcasm:

[spanone]

2. the bu$h* economic legacy will be right up there with his iraq legacy

[thunder rising]

3. If you're not maxing your credit cards ... You're Un-American!

[spanone]

5. just wait till that tax rebate kicks in, these retailers will be doubling their store capcity

:sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm: :sarcasm:

[Chovexani]

18. The hilarious bit

Just about everyone I know is using that check to pay off credit cards or other bills.

[gratuitous]

4. Maybe decimating the middle class wasn't such a good idea after all?

Shit, who knew all those people bought so much stuff? It's not like the financial moguls ever saw them buying yachts at the marina!

[Trajan]

20. Chuckles ..... So easy, a caveman could figure that out ....

GEEEZUS ! .... Let's see: Common citizen/consumers account for TWO THIRDS of all economic activity, yet it is EXACTLY those citizen consumers whom they have financially strangled these last three decades ....

Now; while it is true that the robber baron's have stolen as much as they can before the fall: One might wonder WHICH robber barons are going to take it up the keester because the other robber barons have dried up the well ....

How many small to mid sized retailers are dying this very moment ? ....

I swear: This is the 'Roaring Twenties' all over again ..... People will never remember if they arent reminded from time to time .....

Who will be the next FDR ?

[ProfessorGAC]

27. Absolutely

I won an award from the CCE for a peer reviewed paper published in JUSE that basically showed mathematical proof that no economy is sustainable without a broad, vibrant and powerful middle class with substantial discretionary buying power. Not once in history has an economy ever flourished with only an upper class and peasants. NOT ONCE!

Anyone who thinks that this is good economic policy is actually just in a position to accumulate great personal wealth and has no regard to the rest of the economy. So, it's not an economic position at all. It's striclty a financial position.

The dimunition of the middle class is an economic WMD.
The Professor

[Hannah Bell]

34. If, however, your aim isn't a "flourishing economy," but keeping control

in a limited number of hands - a small middle class works just fine.

Small middle class = those who directly serve elites + police, courts, prisons, & military + bankers & some transnationals.

Worked great in Latin america for the longest time.

[Brigid]

39. Hmmm . . .

Certainly food for thought.

[Brigid]

28. Ya think?

:evilgrin: :banghead:

[Trajan]

6. RW greed kills economies ....

It's the 1920's all over again ....

There is no such thing as Trickle Down ... It is nothing but theft ...

[opihimoimoi]

7. Heack of a job Bushie/GOP...Ya managed to take a surplus and made it

a 3 Trillion Dollar Loss....

Now Look....its all fucked up....

K&R

[Art_from_Ark]

11. And yet, you can still find morons who support this weasel

It's one of life's great mysteries

[opihimoimoi]

16. Its Confirmation a segment of our Pop is Delusional and outta touch w Reality & Sanity

Mostly GOP

[Tesha]

25. 'Least Adam and Steve still cain't get hitched! (NT)

[bdamomma]

52. and even his clone mc same.

[CoffeeCat]

8. You know what's scary?

A recent "60 Minutes" segment on the housing collapse, featured a real-estate expert who said that this
country hasn't even felt 10 percent of the fallout from the mortgage crisis. Millions more homeowners will
lose their homes--from the housing crisis alone.

What will happen when the full brunt of the housing collapse is realized, and also the economy further tanks
because of unemployment and decreased spending due to these business failures? This is going to keep piling
on and piling on.

Much of the retail-business growth was due to people using credit cards and tapping into their home-equity.
That's done. People are maxed out, and if they're not, they're using their credit cards to buy food and gas--not
Pottery Barn and Pier 1.

I'm not an economist, but I see more than a recession on the horizon. Things are going to get worse, and this
will continue to frighten people into less spending and more debt reduction and saving.

I think we'll see a complete contraction of our economy--a scaling down. The massive credit-card fueled growth
is so over and all of those strip malls filled with home-improvement stores, small retailers, restaurants and
furniture stores---were an illusion.

We're in for an unprecedented economic adjustment. They lied to us when they made us feel as if our economy
was humming along and doing well. It was being run on borrowed money and time.

:scared:

[MindMatter]

12. FWIW, just an observation on my street

We had a real estate problem before all this recent talk. The Bear Stearns thing is almost tangential to the real problem. The problem is that people got sucked into mortgages they could not afford. Part of the argument was that they could expect steady wage increases, because, well, that always happens.

Well, this was the absolutely first "recover" in recorded economic history that did NOT include real wage gains for the average American. SO here are millions of people who over-extended hoping to be solid in a recovery cycle. The earnings never made it.

On my street, people started bailing out 3 years ago. At one point, my subdivision of 35 houses had 12 for sale. Most of them sat for 12 months or more. Some of the signs have disappeared. I suspect that those are abandonments.

As I drive home from work, this month I'm starting to see lots of these "Lower Price" and "Price reduced" tags on the real estate signs. It is imploding.

It is easy to say, "Oh that's only 5-10% of the housing stock. Everybody else is in good shape if they just don't panic."

The problem is that there can be life-changing events, such as health problems, that take the decision out of your hands. And certain;y in this economy, many people will be looking at moving in order to find a job. With gas at $4/gal, you sure can't take on a 50 mile commute to another job.

And even if you aren't forced to sell, you have to sit here looking at the debris all around you. That psychology is going to kill the discretionary spending. The snowball has only started to roll, I'm afraid.

[yardwork]

21. The health care crisis combined with credit woes equals economic disaster.

Most people are only a few paychecks from losing their home. How many of us have months of savings available in liquid assets, ready to draw on if we have a healthcare crisis and have to lose a lot of time at work?

With half the U.S. population uninsured or underinsured against medical bills, what happens when - not if - we get sick with something expensive to treat?

[MindMatter]

42. That is the evil side of our system

I'm not anti-capitalism -- not by a long shot. But what we have today is bankers run amok. The moneyed elite in this country have created a situation where they entice, if not force, people to get into a death spiral of debt such that they cannot survive any financial disruption, and certainly not a health crisis.

And these same bastards fight tooth and nail to keep America the only advanced nation that doesn't offer some heath protection to all of its citizens.

That is pure evil. At what point do these bastards have enough money?

[yardwork]

50. It's made me somewhat anti-capitalism. Marx looks wiser all the time.

[yardwork]

9. I was in Linens N Things this evening and it was almost deserted.

There was one person manning the checkout, and no line. Hardly any other customers at all - I was one of maybe half a dozen in the entire store. The merchandise was stale - nothing new, all very picked over, and lots of "buy one, get the other half off" signs everywhere.

In fact, the entire shopping center was almost deserted. This is a big shopping center with Walmart, Best Buy, Barnes and Noble, a big Home Depot, lots of other chains. I couldn't believe how few parking spots were taken at 7 pm on a Monday night. And this is a relatively affluent area with fairly high employment.

Wow.

[CoffeeCat]

13. I experienced the same thing at Super Target...

Normally, the store is bustling. The place was like a tomb.

It was eerie.

A DUer, who works at one of the "big 3 retailers" (they didn't say which one) said that
they are worried at the mgmt level, because sales are really tanking.

[4_TN_TITANS]

24. I've noticed all the empty parking lots lately...

at all the department stores / strip malls. People can't afford the high end stuff anymore.

[MindMatter]

10. Much of the US "consumption economy" depends on impulse buying

Always has. Marketers have gotten really good at getting you to by a bunch of crap you don't need and won't actually use.

But to do that mostly depends on getting you into the stores without much of a purpose in mind. The big stores are all set up for that.

Mindless crap consumption retail, meet $4.00 a gallon gas.

People are actually beginning to change the way the use their vehicles. Many people are now resisting just getting in their cars and driving to the store if they don't have a very specific purchase in mind. Many people are now planning their shopping and errands days ahead so that they can economize on the driving.

That sucks for the retailers depending on mindless buying of worthless crap. But it actually improves our quality of life. We pollute the environment less, we value our purchases more, and we have MUCH MUCH more time available that use to be wasted meandering around.

I think the media has largely missed this important shift in consumer behavior.

[lovuian]

14. this is just the beginning

retail then food industry housing cars

more and more will be unemployed and no insurance

when will the anger get so hot it erupts
:nuke:

[Robbien]

29. Many of these closing are due to speculators buying out the businesses

stripping the stores of all real worth, cutting jobs, loading down the stores with massive debt and then the store has to struggle along staggering around trying to keep alive in this downturn of consumer spending.

Just take a look at Wickes which is holding a bankruptcy going out of business sale. Last summer it was bought out by one of the private equity firms, raped, pillaged and now is dead.

[bdamomma]

53. its like a pressure cooker waiting to let off that built up steam

enough.

[lonestarnot]

15. Dunkin donuts closed two places by me.

Damn it! :donut:

[OmahaBlueDog]

43. That's the more telling sign

Many of the retailers mentioned in the OP were already weak (Levitz) or are on the downside of the fashion cycle (Ann Taylor)

In my area (within 2 miles of my house), Moes Southwest, a Planet Sub, a brand new (less than 6 mo) Taco Bueno, an brand new Aunt Emma's, and an established Sheridan's Custard (in a SuperTarget parking lot)all have closed. 5 miles from me, a Chili's at a mall closed.

[marmar]

17. I was in the big Macy's (formerly Marshall Fields) on State St. in Chicago on Saturday....

..... And typically on a Saturday, the store would be hopping with customers and browsers.....It was dead. I mean "Monday morning just after the store opens" dead on a Saturday afternoon.

[bemildred]

19. Maybe we could outsource the shopping ... nt

[flygal]

56. That's already being done

I live in Germany and hear of people here in Europe spending their Euros and Pounds over in the US. An off season flight to the east coast and cheap hotel still saves them a bundle of dough. Even shopping Amazon.com and paying tarrif is cheaper.

[Elspeth]

22. We've been warned about this on DU

Remember this:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x3111866

And they gave the author such a hard time.

[Elspeth]

23. This gives the whole thread

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=389&topic_id=3111866

[yardwork]

26. I don't understand why so many posters were rude to that OP.

It seemed like a reasonable post to me.

[Elspeth]

30. Denial, maybe.

No one wants to believe what is actually happening.

[yardwork]

31. Many of the nasty responses focused on the "tackiness" of big box stores

while ignoring the enormous elephant in the living room.

[Elspeth]

33. Hate to tell you, but cheap and tacky beats expensive and tasteful in this economy

I shop at Target--it's all I can afford.

[yardwork]

36. I do the same thing.

In any case, I think it's unfair to demonize people for where they shop or work, unless they're working for Blackwater or something like that. I was offended by many of the nasty posts in that other thread.

[girl gone mad]

47. I think so, because..

I used to get the same kind of backlash whenever I mentioned the housing bubble, even as recently as 7 or 8 months ago.

[SidDithers]

41. Thanks, I was just gonna go looking for that thread...nt

Sid

[Bozita]

32. That article is today's NYT headline, above the fold, top right.

[shrike]

35. But we're supposed to start our own businesses if we are jobless

Make our own job. So say a number of rather active DUers who shall remain nameless -- though we know who we are.

Don't know how we are supposed to fare any better in this climate. And this article apparently didn't mention the plight of independents: there are a few in my area and they're all hanging on by the skin of their teeth.

[yardwork]

37. Sell things on ebay - that was Dick Cheney's suggestion.

Of course, ol deadeye dick is not selling things on ebay. He's raking in billions of our money from this war he started. The rest of us are to hand over our money to him and then make up the difference selling on ebay.

[Brigid]

38. Did he really say that?

That's just :wow: even for him.

[yardwork]

40. Yes, he did say that.

The first link I found was Fox News - sorry. Here it is.

http://www.foxnews.com/story/0,2933,132686,00.html

[girl gone mad]

48. I buy on ebay..

for my business. I always wonder about the independent sellers. I know that for many, ebay sales are their sole source of income, but I can't see how they manage when browsing through their feedback and seeing just a few low value sales per day. Selling online is very competitive and the margins are declining. Big sellers moved in several years ago using a strategy of selling items at rock bottom prices and making up for it with higher shipping charges. Now buyers expect the low prices.

[OmahaBlueDog]

44. My recommendations

Learn to brew beer and cook cheap bar food. Then open your own local Democratic Club.Nothing but Air America and KO on the TV.

[Initech]

45. And yet the jackass thinks $600 / person is going to be enough to do it.

:eyes: :banghead:

[Rex]

46. The darkside of mass consumerism.

[Imagevision]

49. They're not admitting we're in a recession because it only makes matters worse... get it?

Imagine the M$M constantly reminding you daily/nightly with questions like; "is your job in jeopardy"? Repukes have already stated months ago it won't be until the spring of 2009 before they can get a reasonably accurate picture as to where this country is headed. (sorry but that is the truth)

[spanone]

51. remember when bu$h* took office, cheney immediately declared we were in a recession

but then he blamed it on clinton...the reason were not admitting to recession now is becausse it's the bu$h* recession

[Indenturedebtor]

54. Here it comes

It was all inevitable as many in this thread have said.

You can't run an economy on debt and debt alone. The only thing that could have kept us going was wage increases over the last 30 years or so. When we hit the real bottom they will blame the Dems.

Personally I had a chance to switch jobs recently and sell to fast food chains. Fast food profits are up! I hope that's not the only industry that weathers this though. It's sad but more and more people are eating $1 cheeseburgers to make ends meet. I think (I hope) I got lucky here with the job change.

Don't forget though that alot of this is regional. There are some areas of the country that haven't been hit quite as hard as others.

[MoeHayNow]

55. Yeah, everything's great!

"Don't forget though that alot of this is regional."

You're right about this. I have heard that there are areas of the country that have not been hit as hard. Trouble is, it seems like Michigan is the epicenter of where things are not at all great.
And it's continuing to spread. Sooner rather than later it will affect everyone.