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Sears Holdings
Выбор редакции
25 августа, 18:40

Sears Death Spiral Accelerates: Vendors Halt Shipments As Cost Of Default Insurance Soars

When we commented back in March on the unexpected "going concern" notice in Sears' 10-K which sent the stock crashing, we pointed out the immediate spin provided by Eddie Lampert's distressed retailer which promised that its comeback plan may help alleviate the concerns, “satisfying our estimated liquidity needs 12 months from the issuance of the financial statements", to which however we added the footnote that "the question is what happens when vendors start demanding cash on delivery as concerns about SHLD.'s liquidity concerns continue to grow." Shortly after, we wrote "Sears Enters Death Spiral: Vendors Halt Shipments, Insurers Bail" in which we described that as Sears financial condition deteriorated, vendors were boosting their "defensive measures", such as reducing shipments and asking for better payment terms, to protect against the risk of nonpayment as the company warned about its finances. The managing director of a Bangladesh-based textile firm said his company is using only a handful of its production lines to manufacture products for Sears' 2017 holiday sales. Last year, nearly half of the company's lines in its four factories were producing for Sears. "We have to protect ourselves from the risk of nonpayment," said the managing director, who declined to be identified for fear of disrupting his company's relationship with Sears.   Furthermore, precisely as we predicted, Mark Cohen, the former CEO of Sears Canada and director of retail studies at Columbia Business School said vendors will keep a close eye on Sears' finances. "Whatever vendors continue to support them are now going to put them on even more of a short string. That means they’ll ship them smaller quantities and demand payment either in advance or immediately upon delivery."   He added: "Sears stores are pathetically badly inventoried today and they will become worse." Fast forward five month when just after Sears reported another quarter of painfully bad results including an unexpected double-digit drop in same store sales, Reuters writes that the "worst case" scenario we envisioned for Sears is now accelerating, and that Sears is having trouble stocking shelves, "as some vendors have fled while others are demanding stricter payment terms because of difficulties hedging against default risk." One reason why Sears' supply chain is in greater turmoil than ever - in addition to Sears' woeful financials of course - is due to the scarcity and high cost of a type of vendor insurance known as accounts receivable puts, which ensure a supplier will be paid even if the retailer files for bankruptcy. Think of them as CDS contracts vendors can buy on a counterparty, in this case their (increasingly insolvent) client, and just like CDS, the puts become prohibitively expensive the closer the underlying entity is to bankruptcy. “It’s too expensive,” Michael Fellner, owner of Montreal-based women’s wear company Lori Michaels Apparel & Manufacturing Inc, told Reuters about the specialized vendor insurance. He also said he stopped shipping to Sears in March, when his insurer stopped providing coverage. Two other small vendors told Reuters they stopped supplying Sears this year because they could not afford the insurance, whose cost spiked after Sears warned in March of “substantial doubt” over its ability to continue as a going concern. They asked not to be identified discussing confidential commercial arrangements. Most concerning, however, is the discovery that Eddie Lampert himself appears to be throwing in the towel on the supply chain: as Reuters explains, Sears’ vendors had previously benefited from support from Sears CEO, billionaire Eddie Lampert, who owns almost half of the company’s shares and is also its largest lender. Through his hedge fund, ESL Investments, Lampert invested in vendor insurance contracts worth $93.3 million in 2012, $234 million in 2013 and $80 million in 2014, according to SEC filings. Lampert's implicit support of vendors however ended one year ago: filings show no investment by Lampert in vendor insurance contracts since 2015. A Sears spokesman said the 55-year-old billionaire is not currently investing in these contracts and declined to say why. In addition to Sears' top stakeholder dropping support, for whatever reason, other hedge funds such as Avenue Capital Group, and traditional credit insurance firms such as Euler Hermes Group, have also exited the insurance market, brokers and investors said. They did not specify the timing of their withdrawal. Predictably, as the number of market participants in the receivables puts market collapse, the cost of insurance contracts surged as they became harder to come by, putting pressure on Sears’ ability to maintain a robust inventory of goods. As a result, merchandise inventory at Sears fell to $3.4 billion as of July 29 from $4.7 billion a year ago, the company disclosed on Thursday. Sears has attributed the inventory decline to its transformation to an online-oriented business from bricks-and-mortar stores. “We continue to work to manage our vendor relationships in a constructive manner… we will continue to ensure that our vendors deliver on their obligations to Sears,” Sears said in its second-quarter earnings statement on Thursday. The reality is that it simply does not have as many suppliers as it once did. Meanwhile, those who can find puts to buy are simply unable to afford them: brokers and investors said that Sears insurance contracts for vendors are currently quoted at more than 4 percent of the value of the vendor’s shipment per month, making them uneconomical for many suppliers whose profit margins are in the single digits. Three years ago, the contracts were being quoted at about 3 percent per month. LG Electronics Inc, which makes Kenmore-branded washing machines and refrigerators as well as LG-branded appliances, told Reuters it has not bought vendor insurance in the past year because of the cost.   Instead, LG said it negotiated shorter payment schedules to minimize the risk of not being paid by Sears. It declined to say how short the payment period was. The typical payment schedule in the industry is close to 90 days, though it can vary by item. Of course, the shorter the payment terms, the bigger the hit to Sears' working capital and, thus, liquidity, with the most dire option being cash on delivery in which vendors simply will not provide the much needed inventory unless they are paid on the spot. Here's Reuters: Sears has promised to pay some suppliers within 15 days, according to a source familiar with the matter who requested anonymity to discuss confidential commercial arrangements. Sears declined to comment.   A 15-day payment schedule gives a vendor priority for repayment in the event of a bankruptcy. This is because claims received within 20 days of a bankruptcy filing are typically repaid in full.   Some vendors are so keen for this protection, that they have offered Sears a small discount of around 5 percent on their merchandise, the source said. As noted above, the increasingly shorter terms means a sharp erosion in working capital: William Danner, president of CreditRiskMonitor.com told Reuters that at the end of the second quarter, Sears would likely have used $587 million to boost working capital – mostly from asset sales – due to the decision by some vendors to not extend as much credit. Sears’ available liquidity at the end of July was $810 million. “Even for a huge company like Sears, finding this much more capital is a burden. This apparent loss of confidence in Sears by its vendors is greater now than it was at the end of 2016,” he said. Should more vendors demand the same payment terms, there is a risk that Sears entire liquidity cushion could disappear. Eddie Lampert, who has valiantly fought for years to delay Sears' inevitable bankruptcy, has complained on several occasions that vendors are trying to exploit Sears’ woes to negotiate better terms. He said last month that some of its vendors reduced their support, “thereby placing additional pressure” on Sears. Sears took the issue to court in June, when it sued Ideal Industries Inc after the maker of Craftsman-branded tools declined to fulfill purchase orders because of Sears' "known fragile financial condition," according to court documents. Ideal Industries declined to comment. And while Lampert may no longer be funding vendor insurance, he is still supporting Sears in more "brute force." He held about $1.7 billion in debt mainly backed by the company's real estate and inventory as of April 29, according to regulatory filings.  The reason for this shift is that unlike secured debt, vendor insurance contracts are not backed by any collateral. Underscoring his "support", last month, Lampert extended a $200 million 151-day credit line to Sears at an annual interest rate of 9.75 percent. To be sure, not everyone has thrown in the towel on Sears: at least one investment firm, Blackstone Group LP's distressed credit arm GSO Capital Partners is backing Sears contracts through December although they did not disclose their value to Reuters. However, it's only a matter of time - in this case a few more quarters of declining same store sales - before virtually everyone gives up on Sears, forcing Lampert to decide between directly funding the company's inventory or finally admitting defeat to the Jeff Bezos juggernaut, and pulling the plug.

Выбор редакции
24 августа, 14:09

Sears Same-Store Sales Plunge 11.5%; To Close Another 28 Stores

Near insolvent retailer Sears Holdings reported another quarterly loss, with same store sales plunging in Q2 more than expected as the company offered more margin-crushing discounts amid an industry that is, in the words of Dick's CEO, in "panic mode". The company blamed a "retail environment that remained challenging, with continued softness in store traffic and elevated price competition." For Q2, Eddie Lampert's company reported a net loss of $251 million, or $2.34 per share from $395 million or $3.70 per share, a year earlier. The adjusted loss was $1.16 a share, beating expectations loss of $2.48 per share, while revenue tumbled from $5.66 billion to $4.37 billion Y/Y primarily due to store closures, modestly beating expectations of $4.21 billion. As part of its restructuring effort and attempt to return to profitability, Sears has been trimming its real estate portfolio, cutting costs and seeking additional liquidity. The retailer announced that it will be closing an additional 28 Kmart stores this year, in addition to the 180 Sears and Kmart stores that have already been shuttered this year, and the 150 stores that are slated to be closed by the end of the third quarter. And while the company's cost-cutting is a welcome, if long overdue, change a bigger problem for Kmart is the collapse in store traffic, as same-store sales plunged 11.5%, worse than the expected 7.1 percent decline. Trying to put a favorable spin on another lousy quarter, CEO Eddie Lampert said that "we are making progress on the strategic priorities we outlined earlier this year and remain focused on returning our Company to profitability... While the third quarter has historically been our most difficult quarter over the past several years, we are working towards making meaningful improvement in our performance this year as a result of the restructuring actions we have put in place." As noted above, Sears same-store sales fell 11.5%, including a decline of 9.4% for Kmart stores, and a drop of -13.2% at Sears stores. Spinning the worse than expected drop in traffic, Sears said that July was the best quarter for the company in terms of comparable sales, "as the restructuring program actions, including the closing of unprofitable stores, have begun to take effect." Sears said it continues to explore opportunities for its Sears Home Services and Sears Auto Centers, as well as its Kenmore and Diehard brands. This could include "potential partnerships or other transactions that could expand distribution of our brands and service offerings to realize significant growth," the company said in a statement. On the balance side, the struggling retail chain said it has been working to generate additional liquidity and ended the second quarter with $442 million cash on hand, compared with $286 million at the end of the first quarter. Sears has used up $605 million of its $1.5 billion revolving credit facility, leaving about $191 million in availability. Total debt at the end of the latest period was $3.5 billion, compared to $4.2 billion at the end of the first quarter of 2017, following recent asset sales. Sears also said it has reached an agreement with Metropolitan Life to annuitize an additional $512 million of its pension liability, under which MLIC will pay future pension benefit payments to roughly 20,000 retirees, helping Sears further trim administrative overhead. As discussed earlier in the year, Sears' deteriorating financial conditions forced the retailer to disclose that there was "substantial doubt" about its ability to "continue as a going concern." Met with fears by the Street that a bankruptcy was looming, Sears countered by saying it remained focused on trying to improve its business, saying the language was in adherence to regulatory standards, CNBC otes. To ease bankruptcy fears, last month Sears said it would begin selling Kenmore-branded and Alexa-enabled appliances on Amazon, although that announcement had little effect on company shares, which have fallen more than 40% over the past 12 months.

22 августа, 23:25

Here's How The Next Recession Begins

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Authored by Simon Black via SovereignMan.com, In 1886 there were only 38 states in the United States. Electric power was still cutting edge technology that few people had ever seen. The Statue of Liberty hadn’t even been dedicated yet. But it was that year that a man named Richard Sears founded a small retail company in Minneapolis, Minnesota that would grow into a retail juggernaut. Sears was truly the Amazon of its day. Even in the late 1800s the company was able to deliver just about any product you wanted right to your doorstep. This was no small feat considering the first delivery truck wouldn’t be invented until 1895. There was no transportation infrastructure. And two-thirds of the population lived in remote rural areas. Yet despite those challenges, Sears was still able to put any product you wanted in your hands. Over time as consumer trends changed, the company started opening physical retail stores. And once the concept of the ‘shopping mall’ became popular, Sears department stores became a mainstay at malls across America. To give you an idea of the size and dominance of Sears back at its peak– the company owned stock broker Dean Witter Reynolds (now part of Morgan Stanley), Coldwell Banker (real estate brokerage), Allstate Insurance (currently a $33 billion company) and it started the Discover card (a $22 billion company). Sears seemed unstoppable… a company so large and powerful that it would rule retail forever. Then Wal-Mart entered the scene. And after years of focusing on efficient logistics and cost savings, Wal Mart eventually outmaneuvered Sears to become the world’s largest retailer. By 2001, Wal-Mart’s revenues were about five times that of Sears. Then Amazon was founded… and consumers began changing their tastes to shop online. Sears totally missed the trend. And today the company is a tiny shell of its former self. Over the past three years alone, Sears has lost more than $5 billion. And its stock price is down nearly 75% since 2014. Plus the company has had to lay off more than half of its peak workforce, around 200,000 employees. To add insult to injury, the company spent about $6 billion over the past decade buying back its shares at prices as high as $174 a share. Shares now trade below $9. That’s a 95% loss to shareholders. Sears recently announced it will close an additional 43 stores (on top of the 265 closures it already announced this fiscal year). This will leave the company with 1,140 stores – just above half its 2012 size. This is a death spiral. And it could mean the sudden loss of 140,000 American jobs. And that’s just Sears. We could see several, large retailers shutter causing hundreds of thousands of lost jobs. Retailers have announced more than 3,200 store closures this year. And investment bank Credit Suisse expects that number will increase to more than 8,600 before the end of the year. For the sake of context, the WORST year on record for retail store closures was in 2008 when the global financial crisis kicked off. But even in 2008, only 6,163 retailers closed. Bear in mind that about one in 10 Americans works in retail. And given the rise of e-commerce, most of those retail jobs are going away. Quickly. E-commerce currently accounts for 9% of the approximately $22 trillion in annual retail sales, up from 0.6% in 1999. And that number is only growing. Most retail stores operate very LOW margin businesses. They rely on having LOTS of customers in order to stay profitable. If even a small percentage of their prospective customers stay home and shop online, they’re finished– from Sears all the way down to the small mom and pop stores. We could see hundreds of thousands of retail workers lose their jobs as companies like Sears fail. Sure, e-commerce will pick up some of the jobs. Large e-commerce companies like Amazon have had to quickly build infrastructure and warehouses to serve customers around the country. That requires lots of hiring. But it’s temporary work. Think of it this way: it took a lot of men to lay railroad tracks across the US. It takes far fewer workers to maintain the rail system. And as shipments increase, you simply run more cars across those tracks. Plus, e-commerce warehouses are becoming more automated and efficient, requiring less human labor than ever before. This sort of creative destruction and disruption isn’t anything to be afraid of; there aren’t exactly too many blacksmiths and buggy repairmen anymore either. Progress occasionally requires the decimation of entire industries, and that’s what’s happening now. In the long-run it’s better for everyone. But shorter-term, there’s going to be a lot of pain. Some of the largest and most vulnerable retailers include Sears, Macy’s and JC Penney, and in total those companies employ close to 400,000 people. All three of these companies could – and probably will – go bankrupt. But it would only take one of these stores going under (a near certainty) to roil the US economy. You may remember during the US Presidential campaign that candidates Trump and Clinton made a big deal about the declining number of coal jobs in the US. To put things in perspective, the US coal industry employs just over 76,000 workers. Sears alone employs almost double that amount. And the pace of job losses across the entire retail sector is gaining steam. The US economy has been in ‘recovery’ now for more than eight years, i.e. it’s been nearly 100 months since the end of the last recession. Yet the average time between recessions in modern US history is 57 months, according to the National Bureau of Economic Research. In other words, the economy is overdue for a recession. And the rapid loss of hundreds of thousands of jobs could certainly end up triggering it.

23 июня, 17:57

Fearing Border Tax, Retailers Boost Lobbying 31 Percent

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by Kennett Werner It’s been a remarkably tough year for the retail sector. So far in 2017, retailers have set a record pace for bankruptcies and store closings. Household names are faring no better than small shops: J.C. Penney said it would shutter 138 locations in July; Macy’s expects 68 locations to close this year; and Sears Holdings will turn off the lights at over 170 Kmart and Sears stores. Since January, 50,000 retail jobs have been cut. Credit ratings agency Moody’s added to an already-grim outlook when, earlier this month, its list of U.S. retailers at risk of bankruptcy rose to 22. That’s higher than the 19 at-risk retailers singled out during the financial crisis. Amid this gloomy picture, retailers are lobbying more than ever. Lobbying expenditures rose by 31 percent in the first quarter of 2017 compared with the same period last year. So far in 2017, retailers have spent $16.4 million lobbying Congress. They spent $45.8 million last year. Retailers are pushing for “anything that puts money in the consumer’s pocket,” says Howard Davidowitz, an independent retail consultant. That means tax cuts are a top priority. It’s little surprise that lobbying spiked as Republican leadership in the House has called for a border adjustment tax. To encourage domestic production, the controversial tax arrangement would tax exporters at a lower rate than importers by allowing companies to deduct the cost of American-made goods from taxable revenue. Retailers, whose products are mostly imported, would be hard hit under the proposal. They argue that consumers would ultimately bear the cost of such a tax—to the tune of $1,700 each year—through higher prices. Retailers jumped into action to oppose the bill. CEOs of Target, Best Buy, and J.C. Penney, among others, met with President Trump in February. Retailers joined oil refiners and automakers to launch Americans for Affordable Products, an advocacy group that has aired ads criticizing the tax proposal. (Companies that primarily export, like Boeing and Dow Chemical, formed their own group—the American Made Coalition—in opposition.) Testifying before the House Ways and Means Committee, Target CEO Brian Cornell estimated that Target’s tax rate would increase by 40 percent with a border tax. He added that Target’s customers—“middle-class working families whose budgets are already stretched”—would bear the brunt through price hikes. Cornell got a sympathetic response from Rep. Erik Paulsen (R-Minn.), who once worked for Target and now represents the company’s home district. Paulsen said he could not support border adjustment in its current form. Behind the scenes, Target has spent $1.3 million lobbying just this year—jumping from number ten to number four in lobbying outlays among retailers since 2016, when it spent $1.7 million. Those efforts have kept border adjustment at bay. In an interview with CNBC last month, Treasury Secretary Steven Mnuchin criticized the scheme for creating an uneven playing field with “different impacts on different companies.” In private he has signaled to lawmakers that the tax proposal does not have White House backing. But retailers will not rest easy until they’ve killed off talk of border adjustment for good. That hasn’t happened yet: Border adjustment is tied to corporate tax reform, a centerpiece of the Republican agenda. (Authors of the Republican tax blueprint claim that border adjustment will raise $1 trillion in tax revenue over a decade, which will be necessary to offset revenue losses from their goal of a significantly lower headline corporate tax rate.) On Tuesday Speaker Paul Ryan (R-Wis.) made clear that he plans to push ahead with a tax overhaul in 2017. Earlier this month, House Ways and Means Committee Chairman Kevin Brady (R-Texas) said he wants to see border adjustment phased in over five years. Another lobbying issue for retailers is a digital sales tax. Here retailers are divided: On one side are remote sellers that have no obligation under federal law to collect and remit tax on Internet sales. On the other side are big-box retailers and Amazon, which do charge sales tax. In April, senators reintroduced a bill known as the Marketplace Fairness Act to address the discrepancy. (It passed the Senate in 2013 but never made it to the House.) The National Retail Federation, a trade group that has spent $2.3 million lobbying this year, backs the bill. A digital sales tax seems low on the list of lawmaker priorities. Mired in debates over healthcare and corporate tax reform, “Congress has bigger fish to fry,” says Richard Pomp, a law professor at the University of Connecticut. Part of the retail lobbying frenzy this year is due simply to the fact that there’s a new administration, adds Davidowitz, the consultant. “There’s a tremendous amount of change being talked about. It would be understandable that you want to get the word in as quickly as you can to the new people.” -- This feed and its contents are the property of The Huffington Post, and use is subject to our terms. It may be used for personal consumption, but may not be distributed on a website.

23 июня, 17:41

Nordstrom (JWN) to Open Second Rack Store in Milwaukee Area

Nordstrom Inc. (JWN) is steering ahead with its store expansion plan evident from the announcement of its intention to open another Nordstrom Rack store in Wisconsin in fall of 2018.

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23 июня, 17:15

Sears to close another 20 stores

Read full story for latest details.

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23 июня, 14:10

Here are the 20 additional stores Sears plans to close

Sears Holdings plans to close 20 more Seritage-owned stores in the U.S., in addition to the more than 200 closures that have already been announced.

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22 июня, 22:20

Sears is shuttering 20 more stores

Sears Holdings is shuttering 20 more U.S. stores, in addition to the more than 200 closings that were already announced this year, Business Insider reports.

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22 июня, 21:36

Sears is closing 20 more stores — here's the full list

Sears Holdings is closing 20 more stores in the US, in addition to the...

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22 июня, 15:52

Sears Canada Announces Bankruptcy; Fires 2,900

Update: Sears Canada was authorized to obtain financing of C$450 million. The bankrupt company said it would close 20 full-line locations plus 15 Sears Home stores, 10 Sears Outlets and 14 Sears Hometown locations; it would also cut 2,900 positions across retail network, corporate head office in Toronto. * * * It's official - the US 'retail apocalypse' has moved north as Sears Canada (and some of its subsidiaries) have applied to Ontario Superior Court of Justice for protection under the companies’ Creditors Arrangement Act (CCAA), in order to continue to restructure its business. Sales at Sears Canada have fallen sharply since it was spun off from its equally-troubled US-based parent in 2012; the slump coincides with a broader shift in consumer preferences away from brick and mortar retailers and toward e-commerce. This shouldn;t come as a surprise to anyone, in an admission last week, Sears Canada said it has “significant doubt” that it can continue to operate for much longer. Meanwhile, its American counterpart announced that it would lay off 400 employees as part of an initiative to produce $1.25 billion in savings after admitting back in March that the future of its business is also in serious jeopardy, as Fortune reported. Statement from Sears Canada (note you would hardly think this is a 'bad' thing judging by this PR spin) Sears Canada Reinvention Continues   Over the past 18 months, Sears Canada embarked on a reinvention plan that has now begun to gain traction with customers. Sears Canada rebuilt its front and back-end technology platform, redefined its brand positioning, revamped its product assortment, and rebooted its customer experience and service standards.  The new product assortment is reflected in two pillars, The Cut @ Sears, which offers designer labels at everyday value prices, and the Sears Label, which offers premium quality and enduring styles, also at everyday value prices.  The customer experience was reinvented, both online, with a newly designed site built in-house by a new technology team, and in-store with a new format called Sears 2.0. Sears Canada also redefined its customer service standards to be best-in-class, and launched a new store in downtown Toronto to showcase its reinvention to an entirely new audience.   The Company's hard work to bring its vision to reality is reflected in reported growth in same store sales in its two most recently completed quarters. Sears Canada believes this indicates that the new brand positioning is starting to resonate with consumers.  The brand reinvention work Sears Canada has begun requires a long-term effort, but the continued liquidity pressures facing the Company as well as legacy components of its business are preventing it from making further progress and from restructuring its legacy assets and businesses outside of a CCAA proceeding.   If granted, the Sears Canada Group will work to complete its restructuring in a timely fashion and hopes to exit CCAA protection as soon as possible in 2017, better positioned to capitalize on the opportunities that exist in the Canadian retail marketplace. As a reminder, we noted last week that if Sears Canada was to go bankrupt, Lambert loses his equity stake, but he remains the company’s principal creditor. Already, Lampert has effectively laid claim to enormous amounts of the company’s assets through loans he’s made. His hedge fund, ESL Investments, also owns large stakes in Lands’ End and a Real Estate Investment Trust that gained control of some of Sears’ best properties in a $2.8 billion deal back in 2015, then leased them back to the company. Lambert owns a stake in that vehicle, too. In other words, while Sears was floundering, Lambert was busy shielding himself from the worst of the fallout. His former employees will need to make due with the public safety net.

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14 июня, 17:55

Realty Income Corp (O) Stock Has Been Thrown Out With the Bathwater

The past 12 months haven’t been particularly fun ones for owners of Realty Income Corp (NYSE:O). Then, there’s the growing number of retail store closings announcements, a little too close to home for Realty Income. Sears Holdings Corp (NASDAQ:SHLD) intends to shutter even more locations this year than had previously been announced in January.

14 июня, 17:53

Wall Street edges lower after Fed raises rates

US stocks edged down at the close after the US central bank raised interest rates for the second time this year.The Federal cited continued US economic growth and job market strength.It also said it will begin cutting holdings of bonds and other securities this year.The Dow Jones closed up 0.22% at 21,374.56, while the wider S&P 500 index fell 0.10% to 2,437.92. The tech-heavy Nasdaq fell 0.41%, to 6,194.89. "I don't think that there is really too much new in here outside of the fact that the Fed remains committed to the slow gradual normalisation process despite some of the weak data that we've had," said Mark Cabana, head of US short rates strategy at Bank of America Merrill Lynch in New York.US consumer prices unexpectedly fell in May and retail sales recorded their biggest drop in 16 months.

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14 июня, 04:30

'Retail Apocalypse' Moves North As Sears Canada Admits Its Future Is In "Serious Doubt"

The retail apocalypse that has caused the closing of thousands of department stores in the US – not to mention the evaporation of tens of billions of dollars in market capitalization - is moving north: Sears Canada revealed Tuesday that it’s exploring a sale or a possible restructuring as it draws nearer to bankruptcy. In an admission that shouldn’t come as a surprise to anyone who has ever shopped online, Sears Canada said it has “significant doubt” that it can continue to operate for much longer. Meanwhile, its American counterpart announced that it would lay off 400 employees as part of an initiative to produce $1.25 billion in savings after admitting back in March that the future of its business is also in serious jeopardy, as Fortune reported. Sears Canada’s shares slid as much as 40% on the news. "The company continues to face a very challenging environment with recurring operating losses and negative cash flows from operating activities in the last five fiscal years, with net losses beginning in 2014," the company said, according to the Financial Post. Sales at Sears Canada have fallen sharply since it was spun off from its equally-troubled US-based parent in 2012; the slump coincides with a broader shift in consumer preferences away from brick and mortar retailers and toward e-commerce. Shares of some of the biggest department and big-box stores have seen double-digit declines this year against the backdrop of a broader market rally. Macy’s, J.C. Penney, Sears and Dick’s Sporting Goods. Meanwhile, Amazon briefly climbed above $1,000. Department stores were slow to develop strong e-commerce platforms, leaving Amazon to dominate a segment of the market that’s seeing double-digit annual growth. Amazon’s share of the US e-commerce market rose to 43% this year, and its shares briefly climbed above the $1,000 threshold. Ignoring the fact that corporate mismanagement has more or less defined the Sears brand in recent years, Sears Holdings PR team assures readers that - in the grand scheme of things - the cuts to its workforce really aren’t all that significant. "While the total number of people who are directly affected represents a small fraction of our total headcount, we are conscious of the impact on individual employees," Sears said. Those workers who are being handed pink slips can hopefully find solace knowing that the retailer has promised that it will continue to take "all necessary action" to achieve profitability – short of cutting the pay of Eddie Lambert, the company’s CEO, chairman and largest shareholder. Lambert, as USA Today reported back in March, has extracted “significant value” from the company in recent months, and stands to profit further if the company goes belly up. Although in a sense, Lambert has already taken a pay cut: Sears’ stock has shed more than 41% over the past 12 months, and is down 25% year to date as well. However, Lambert has managed to protect his investment in Sears – or what’s left of it – from the seemingly inevitable bankruptcy that stands to wipe out the other shareholders – American retirees, to the extent that Vanguard and State Street both own large stakes. If Sears goes bankrupt, Lambert loses his equity stake, but he remains the company’s principal creditor. Already, Lampert has effectively laid claim to enormous amounts of the company’s assets through loans he’s made. His hedge fund, ESL Investments, also owns large stakes in Lands’ End and a Real Estate Investment Trust that gained control of some of Sears’ best properties in a $2.8 billion deal back in 2015, then leased them back to the company. Lambert owns a stake in that vehicle, too. In other words, while Sears was floundering, Lambert was busy shielding himself from the worst of the fallout. His former employees will need to make due with the public safety net.

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13 июня, 18:21

Sears сократит 400 рабочих мест

Американский ритейлер Sears Holdings заявил, что сократит около 400 сотрудников, занятых полный рабочий день в офисах компании, а также занимающих вспомогательные должности. Компания уточнила, что большинство увольнений придется на офис Hoffman Estates, однако будут совершены сокращения и в зарубежных подразделениях. Напомним, что в рамках реализации программы с целью повышения финансовой устойчивости компания сначала сократила часть сотрудников, занятых неполный рабочий день, а также уменьшила число запланированных к открытию магазинов. В апреле Sears заявила, что намеревается в фискальном 2017 г. снизить издержки на $1,25 млрд.

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13 июня, 16:29

Sears сократит 400 рабочих мест

Американский ритейлер Sears Holdings заявил, что сократит около 400 сотрудников, занятых полный рабочий день в офисах компании, а также занимающих вспомогательные должности. Компания уточнила, что большинство увольнений придется на офис Hoffman Estates, однако будут совершены сокращения и в зарубежных подразделениях. Напомним, что в рамках реализации программы с целью повышения финансовой устойчивости компания сначала сократила часть сотрудников, занятых неполный рабочий день, а также уменьшила число запланированных к открытию магазинов. В апреле Sears заявила, что намеревается в фискальном 2017 г. снизить издержки на $1,25 млрд.

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09 июня, 23:26

RETAIL BLUES: List Of Retailers In Danger Of Bankruptcy Hits Record 22. The list includes: Boa…

RETAIL BLUES: List Of Retailers In Danger Of Bankruptcy Hits Record 22. The list includes: Boardriders SA – sporting subsidiary of Quiksilver The Bon-Ton Stores – parent of department store chain Fairway Group Holdings – food retailer Tops Holding II – supermarket operator 99 Cents Only Stores – discount retailer TOMS Shoes – footwear company […]

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09 июня, 20:20

"It's A Perfect Storm": List Of Retailers In Danger Of Bankruptcy Hits Record 22

The US retail sector continues to sink at an alarming rate, and according to the latest iteration of Moody's list of retailers who are in danger of filing for bankruptcy, there are now 22 distressed retailers whose troubled financials the rating agency believes could make them potential bankruptcy candidates in the near future, up substantially from just two months ago, and topping the 19 recorded at the peak of the Great Recession. According to Moody's analyst Charles O'Shea, legacy retailers such as Sears, Neiman Marcus and others on the rating agency's retail distress list, face a "perfect storm" and warned that "you're on the Andrea Gail right now, and the water's starting to get very choppy." The worst could be yet to come as the Moody's analyst writes that "the ranks of distressed retailers is set to keep growing over the next 12 to 18 months amid a secular shift in the industry." Moody's list consists of all retailers which have ratings of Caa or lower. That number has grown to 22, or approximately 15%, of the firm's retail and apparel universe. "When you're down there in C-a land, bankruptcy is a real possibility," O'Shea said. "The majority of retailers remain fundamentally healthy," said O'Shea, "But as select groups of retailers continue to deteriorate -- in particular department stores and specialty retailers -- we believe the distressed ranks will keep growing, fueled in part by distinct vulnerabilities within the B2/B3 retail population." Focusing on those retailers with imminent default risk, Moody's adds that of 42 B2/B3 rated issuers (as of April 30, 2017), seven face $1.1 billion of maturities for asset-based loans and revolving credit facilities over the next year- elevating the risk of default for already-stressed and distressed issuers should the strong refinancing pace driving recent high-yield issuance recede. Such a risk is underscored by Moody's US speculative-grade default forecast, which predicts a decline in the overall US speculative-grade default rate to 3% by April 2018 from 4.5% today, even as spec-grade retail and apparel default forecasts trend significantly higher, at 6.7% and 6.8%, respectively. Some of the highliights from the latest Moody's report Competitive challenges are intensifying and the credit erosion among more challenged retail sectors and individual retailers is crystallizing rapidly as more issuers file for bankruptcy and miss payments The competitive challenges weighing on earnings performance for bigger retailers like Amazon.com, Walmart Stores, Best Buy and Target will have potentially devastating ripple effects for smaller, more challenged retailers over the next several quarters Common characteristics of retail and apparel companies with lower credit ratings include stressed liquidity, weak quantitative credit profiles, challenged competitive positions, sponsor ownership and erratic management structure Liquidity is typically the driving force in the assessment of credit risk, and a key determinant in any drop into Caa/Ca territory. “Risk becomes more acute when a company is facing a meaningful debt maturity." Some names that figured previously on Moody's list have already filed for Chapter 11 protoection: among them discount footwear company Payless ShoeSource and Rue21, a teen fashion retailer, both filed for bankruptcy recently, while Gymboree, a specialty seller of children's apparel, missed its June 1 interest payment and is expected to announce its bankruptcy filing shortly. While landing on the distressed list of "super fallen angels" is not a death sentence, recently JC Penney managed to crawl out of it, the probability that a company will end up in bankruptcy rather than get its financial in orders is orders of magnitude greater.  "There are companies that come out of that," said O'Shea, who noted that iconic retailer J.C. Penney "was down there, and is now out," with an improved rating. Doing the math here, with one company "out" and everyone else eventually filing, restructuring lawyers are finally going to be busy after a nearly decade-long hiatus. Below is the full list of deeply distressed retailers: Boardriders SA  - sporting subsidiary of Quiksilver The Bon-Ton Stores - parent of department store chain Fairway Group Holdings - food retailer Tops Holding II - supermarket operator 99 Cents Only Stores - discount retailer TOMS Shoes - footwear company David's Bridal - wedding dresses and formalwear seller Evergreen AcqCo 1 LP - parent of thrift chain Savers Charming Charlie - women's jewelry and accessories Vince LLC - clothing retailer Calceus Acquisition - owner of Cole Haan footwear firm Charlotte Russe - women's clothing Neiman Marcus Group - luxury department store Sears Holdings - owner of Sears and Kmart. Indra Holdings - holding company owner of Totes Isotoner Velocity Pooling Vehicle - does business as MAG, Motorsport Aftermarket Group Chinos Intermediate Holdings - parent of J. Crew Group Everest Holdings - manages Eddie Bauer brand Nine West Holdings - clothing, shoes and accessories Claire's Stores - accessories and jewelry True Religion Apparel - men's and women's clothing Gymboree - children's apparel

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07 июня, 05:00

Sears Closing Another 66 Stores; Joe's Crab Shack Files For Bankruptcy

Here's another example of when cornered hacks blame "fake news" or in this case, the "irresponsible media" for their gross incompetence, only to prove the media very much responsible and unfake. One month ago, Sears CEO Eddie Lampert blasted the media for "unfairly singling out" the company over the past decade and blamed "irresponsible" coverage for the retailer's woes. Sears, once the largest U.S. retailer, recently hit rock bottom and continued to dug when it warned investors in March there was a chance it may not survive after years of losses and declining sales. Still, that very warning did not prevent Lampert from lashing out at those who have - correctly - been warning that his company bankruptcy is just a matter of time, and back in May he kicked off the company's annual shareholders' meeting at the company's HQ with a 12 page slideshow of headlines about the company's financial distress, dating back to 2008 (Lampert is known for his peculiarities, collecting morbid headlines about his biggest asset was not known to be among them). "You'd think it was from a month ago, but it's literally been going on for a decade," Lampert told the handful of furious Sears shareholders in attendance who have seen the value of their stock wiped out over the years. There were other fireworks during the meeting, like for example when Lampert compared Sears - which hasn't posted a profit in six years - to Amazon's early unprofitable growth. He predicted people will look back and wonder how they missed the Sears' turnaround. The audience was not amused, and six shareholders questioned Lampert, including one asked if Lampert was paranoid and in denial about the company's losses. Confirming the former, Lampert denied saying there were "behind-the-scenes" counterparties trying to take advantage of the company's situation and that he was trying to adapt and preserve as many jobs as possible. "That's not about denial; that's about caring." There was little else of substance discussed, with the bulk of Lampert's 90-minute appearance focused on the negative news coverage, which - just like Hillary Clinton - he said had been "deliberately unfair." "It's irresponsible and it's been irresponsible for too damn long. We're just looking for a fair chance," Lampert said of the media. "Excuse my rant but a lot of what we're doing deserves a chance to see the light of day." Less than a month later, Sears quietly proceeded to close another 66 stores in Lampert's drive to prove that he is neither paranoid not in denial, but merely a "caring" individual with a penchant for blaming the media for all his problems. Also, the company is burning through millions in cash, so it really had no other choice. The closures will include 49 Kmart stores and 17 Sears stores, with most shut by September according to USA today. The new closures are in addition to the 180 shutdowns Sears announced earlier this year. Last month, roughly around the time Lampert was bashing "fake news" for the disintegration of Sears, the near-defunct retailer, in its latest scramble to preserve cash announced that it would delay repaying much of a $500 million loan; instead subs of Sears Holdings were granted a forebearance allowing them to repay only $100 million of the loan in July, the initial maturity date of the total debt. The remaining $400 million is not scheduled to come due until January of 2018, with Sears having an option - which it will exercise - of pushing the maturity to July of next year. The creditors will likely see at most pennies on the dollar. * * * Elsewhere, as had been largely anticipated, the operator of the Joe’s Crab Shack and Brick House Tavern & Tap chains, Ignite Restaurant Group, was finally extinguished when the company filed for Chapter 11 bankruptcy, hoping to sell itself to an affiliate of Kelly Investment Group. The company, which had seen a steep drop in sales in recent years, listed total debts as of April 30 of  $197.3 million on $153.4 million in assets. Of course, the rats left the sinking ship long ago, with CEO Robert S. Merritt resigning in April, when he was replaced with turnaround firm Alvarez & Marsal. Ignite operates, or rather operated, 137 Joe’s and Brick House restaurants in 32 states, with “large numbers” in Texas, Florida and California, plus - of all places - three franchises in the United Arab Emirates. It employs 8,400 people, including 5,500 part-time workers. The first Joe’s opened in Houston in 1991. Fear not though bland seafood fans: the brand will continue to exist upon emergency from bankruptcy: Ignite has lined up Kelly affiliate KRG Acquisitions as a “stalking horse” to open bidding in a court-supervised auction. KRG is willing to pay $50 million and assume liabilities. One thing that will not be coming back, however, is a substantial number of employees, many of whom who will be "synergized" and "restructured" away.

02 июня, 16:55

Monstrous Managers: 15 of the Most Hated CEOs of All Time

The world has seen a lot of villainous managers come and go over the years. But none is more despised than this lot of 15 CEOs.

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