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Sears Holdings
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26 апреля, 16:11

S&P: These Ten Retailers Will File For Bankruptcy Next

Three weeks ago, we reported that Fitch had put together a list of 8 retailers who were likely next in line to file for bankruptcy. The rating agency speculated that distressed legacy "bricks and mortar" outlets such as 99 Cents Only, rue 21, Gymboree and True Religion would follow what has already been a historic surge in retailers filing for Chapter 11 protection and/or shuttering stores. The Fitch list is below: Sears Holdings Corp (roughly $2.5 billion); 99 Cents Only Stores LLC; Charming Charlie LLC; Gymboree Corp.; Nine West Holdings Inc.; NYDJ Apparel LLC; rue21, Inc.; and True Religion Apparel Inc. Putting this list in context, over the weekend we presented a chart from Credit Suisse showing that on an annualized basis, some 8,640 - or more - stores would be closed in 2017, the highest number on record. As we further showed, the number of announced store closures so far in 2017 - whether in bankruptcy or otherwise - is already staggering: Additionally, as the WSJ previously observed, the number of bankruptcies so far this year has already come close to the total in 2016, with 14 retailers filing compared with 18 last year. And it's only just beginning. Taking a cue from their peers at Fitch, analysts at S&P Global Market Intelligence likewise released a list of 10 publicly traded retailers they consider most at risk of default within the next 12 months. As the WSJ notes, the firm’s analysis is based on industry factors, such as intensity of competition and barriers to entry, as well as company-specific metrics. “The shift to online shopping has left a lot of financial distress in its wake,” Jim Elder, director of risk services at S&P, wrote in a research note. “The results from the first quarter do not suggest that a quick recovery is on the horizon.” As expected, some (surprisingly not all) retailers disputed S&P’s analysis; the rest pointed to previous statements or didn’t respond to requests for comment. Also notable: while there were some similarities between the Fitch and S&P lists, namely Sears, most of the names in the two lists diverged, suggesting that between Fitch and S&P up to 17 retailers may be going under soon. Here’s S&P’s ranking, courtesy of the WSJ: 1. Sears Holdings Corp. Sears has been buying time by making cost-saving maneuvers that include the sale of its Craftsman brand and the closure of 150 stores. On Friday, the retailer said it would shutter 92 Kmart pharmacies and 50 Sears Auto locations this year. Sears “is determined to remain a viable competitor in retail and we are taking all necessary actions to improve our performance,” said a spokesman for the company. 2. DGSE Companies Inc. The Dallas-based seller of precious metals and jewelry has been struggling with declining sales. It has a market value of about $43 million. Following a leadership change in December, the company said it “eschewed the unsuccessful strategies of recent years” and expects to post a profit in the first quarter for the first time in four years. 3. Appliance Recycling Center of America Inc. The recycler and seller of household appliances, with about 18 retail locations under the ApplianceSmart banner, has a market value of less than $10 million. 4. The Bon-Ton Stores Inc. The department store chain, with dual headquarters in Milwaukee, Wis., and York, Pa., reported a $63 million loss in 2016 and expects comparable sales to decline in 2017. It operates about 263 stores. Although it had more than $2.5 billion of revenue last fiscal year, it has a $13 million market value. 5. Bebe Stores Inc. The mall-based women’s apparel chain, which was popular for its fitted clothing in the early 2000s, has suffered from declining foot traffic and a consumer shift toward more subtle styles. Last week, the company said it would close its remaining 168 locations and only sell online. 6. Destination XL Group Inc. The chain sells men’s big and tall apparel in about 344 stores. The company said in March it would slow store expansion, increase marketing spending and improve its digital operations. It projected a net loss for 2017 on about $470 million to $480 million in revenue. “We strongly believe the analysis by S&P Global Research is misguided and does not in any way, shape, or form fairly represent our company’s current financial position,” said David Levin, CEO of Destination XL. “Our financial condition is extremely healthy.” 7. Perfumania Holdings Inc. The specialty retailer, which sells perfumes and fragrances, has been facing dwindling foot traffic to its stores in malls and tourist-dependent areas. The company has a market cap of about $14 million. 8. Fenix Parts Inc. A small reseller of automotive parts reclaimed from damaged vehicles. It has a market value of less than $25 million. 9. Tailored Brands Inc. Tailored Brands, which primarily sells men’s apparel, has been struggling amid increased competition from several e-commerce players. Comparable sales at Men’s Wearhouse, the company’s largest brand, fell 2.2% in the fourth quarter and are expected to decline in fiscal 2017. Shares are down nearly 50% this year. The S&P’s analysis is “extremely misleading” because it “does not take into account debt maturities and our first debt maturity is not until 2021,” a company spokeswoman said. 10. Sears Hometown and Outlet Stores Inc. The retailer, which was spun off from Sears Holdings in 2012, closed 160 stores in fiscal 2016 as part of an effort to cut costs. As of Jan. 28, the company or its independent dealers and franchisees operated a total of 1,020 stores. It had $2 billion in revenue last fiscal year, but has lost money for three straight years.

25 апреля, 22:22

5 Retail Stocks to Ride Out the Brick-and-Mortar Debacle

Select brick-and-mortar stocks still offer the promise of strong profits

24 апреля, 23:40

3 IPOs to Watch For This Week

The last week of April is scheduled to see eight different companies go public, and Zacks has you covered with three unique IPO offerings to watch out for.

23 апреля, 01:43

"The Retail Bubble Has Now Burst": A Record 8,640 Stores Are Closing In 2017

        “Thousands of new doors opened and rents soared. This created a bubble, and like housing, that bubble has now burst.”         - Richard Hayne, Urban Outfitters CEO, March 2017 The devastation in the US retail sector is accelerating in 2017, and in addition to the surging number of brick and mortar retail bankruptcies, it is perhaps nowhere more obvious than in the soaring number of store closures. While the shuttering of retail stores has been a frequent topic on this website, most recently in the context of the next "big short", namely the ongoing deterioration in the mall REITs and associated Commercial Mortgage-Backed Securities and CDS, here is a stunning fact from Credit Suisse:"Barely a quarter into 2017, year-to-date retail store closings have already surpassed those of 2008." According to the Swiss bank's calculations, on a unit basis, approximately 2,880 store closings were announced YTD, more than twice as many closings as the 1,153 announced during the same period last year. Historically, roughly 60% of store closure announcements occur in the first five months of the year. By extrapolating the year-to-date announcements, CS estimates that there could be more than 8,640 store closings this year, which will be higher than the historical 2008 peak of approximately 6,200 store closings, which suggests that for brick-and-mortar stores stores the current transition period is far worse than the depth of the credit crisis depression. As the WSJ calculates, at least 10 retailers, including Limited Stores, electronics chain hhgregg and sporting-goods chain Gander Mountain have filed for bankruptcy protection so far this year. That compares with nine retailers that declared bankruptcy, with at least $50 million liabilities, for all of 2016. On Friday, women’s apparel chain Bebe Stores said it would close its remaining 170 shops and sell only online, while teen retailer Rue21 Inc. announced plans to close about 400 of its 1,100 locations. Broken down by retailer, either in bankruptcy or not yet: Another striking fact: on a square footage basis, approximately 49 million square feet of retail space has closed YTD. Should this pace persist by the end of the year, total square footage reductions could reach 147M square feet, another all time high, and surpassing the historical peak of 115M in 2001. There are several key drivers behind the avalanche of "liquidation" signs on store fronts. The first is the glut of residual excess retail space. As the WSJ writes, the seeds of the industry’s current turmoil date back nearly three decades, when retailers, in the throes of a consumer-buying spree and flush with easy money, rushed to open new stores. The land grab wasn’t unlike the housing boom that was also under way at that time. “Thousands of new doors opened and rents soared,” Richard Hayne, chief executive of Urban Outfitters Inc., told analysts last month. “This created a bubble, and like housing, that bubble has now burst.” The excess retail space means that North America has a glut of retail outlets, as well as far too many shopping malls, something which is becoming apparent as sales per capita decline. On a per capita basis, the US has roughly 24 square feet of retail space per capita, more than twice the space of Australia and 5 times that of the UK.   The over-storing, including the influx of fast-fashion and off-price chains, has resulted in a brutally competitive landscape that made difficult for retailers to raise prices. “A pair of men’s dress pants costs less today than they did a decade ago,” Manny Chirico, chief executive of Calvin Klein and Tommy Hilfiger parent PVH Inc., said in a recent interview. * * * Then there are retail rental rates, which across top US markets, such as New York, remain the highest in the world. For years, retailers could afford the egregious demands by landlords. But as overall traffic and volumes have declined, this has also prompted an exodus of outlets even among the most desired locations, leading to a surge in "fors rent or lease" signs popping up in unexpected places like Madison Avenue's "golden mile."   According to the FT, on New York’s Fifth Avenue, the world’s most expensive shopping street, vacancy rates have jumped from 10 per cent a year ago to 16 per cent, according to Cushman & Wakefield. Rents there have fallen for the first time since the recession “and the trend is not over”, the consultancy warns. Vacancy rates across SoHo have climbed to 18 per cent, from 12 per cent a year ago, according to Jones Lang LaSalle. The newfound caution among retailers has had a “very significant and fast” negative impact on retail property, says Chris Conlon, chief executive of Acadia Realty, a real estate investment trust.    It is not just prestigious streets that have been hit. Malls are also hurting, as chains from Sears to Macy’s shut hundreds of stores. Analysts at Green Street Advisors argue that “low growth is the new normal”, while market rents are becoming decoupled from tenants’ revenue growth as more sales move online.  “[Rents] are at a price point now that exceeds what retail sales can perform,” says Spencer Levy, global head of research for CBRE. He notes that a stronger US dollar also hurts sales in New York, where deep-pocketed foreigners historically flock for deals. * * * Then there is the online migration, which recently made Jeff Bezos, owner of Amazon, the world's second richest man. As the WSJ adds, as retailers rushed to expand their physical footprint, the internet was gearing up to do to apparel companies what it had already done to booksellers: sap profits and eliminate what little pricing power these chains commanded. Despite the view that shoppers prefer to try on clothing in physical stores, apparel and accessories are expected this year to overtake computers and consumer electronics as the largest e-commerce category as a percentage of total online sales, according to research firm eMarketer.   Helena Cawley, 37 years old, said she used to be a “die-hard” department-store shopper. But with two small children, the Manhattan entrepreneur doesn’t have time to visit physical stores the way she once did. “I buy much more online now,” she said. “With free returns and free shipping, it’s so easy.” Ironically, that shift to online shopping has come at a high cost to retailers. It is less profitable to do business online than in a brick-and-mortar store, largely due to the higher shipping, customer-acquisition and technology costs of the digital world. Retail margins on average fell to 9% last year from 10.5% in 2012, according to consulting firm AlixPartners LP. Over that period, e-commerce sales increased to 15.5% of total sales from 10.5%. The internet has also made it easier for consumers to comparison shop, thereby erasing any pricing leverage retailers may have had. “The internet has acted as the great price equalizer,” said Joel Bines, the co-head of Alix’s retail practice. * * * Yet while the retail bubble may have burst, does that mean the conventional brick-and-mortar industry is doomed? Perhaps not: Retailing has gone through shakeouts before, whether it was the superstores such as Wal-Mart Stores Inc., Target Corp. and Kmart that killed mom-and-pop shops, or category killers like Barnes & Noble Inc. and Toys “R” Us Inc. that did the same to smaller booksellers and toy chains. And even today, there are chains that continue to grow, such as off-price retailer TJX Co s., which is opening hundreds of stores under its Marshalls, T.J. Maxx and HomeGoods banners, as it steals market share from Macy’s Inc. and other traditional department stores.   “This is not the end of retailing as we know it,” Mr. Bines said. “People are not going to stop going to stores.” He's right, however in the meantime there will be an avalanche of defaults: compounding the retail decline is the debt that retailers have added to their balance sheets in recent years, either through leveraged buyouts or to fund share buybacks. That leverage has become a problem as profits dry up. According to Moody’s Investors Service, the amount of debt coming due for 19 distressed retailers is set to more than double over the next two years. Many retailers were slow to seize on the significance of these changes. When business was bad during the 2015 holiday season, many chains blamed unusually warm weather. But when the most recent holiday season once again failed to produce robust sales growth, “retailers realized this was a structural change,” Credit Suisse analyst Christian Buss said. With all that in mind, is Amazon assured of becoming the world's first trillion-dollar stock, perhaps hitting the milestone even before Apple? Perhaps, then again, chains such as Wal-Mart have stepped up their game. In a bid to better compete with Amazon.com , the giant retailer has been scooping up e-commerce startups, including Jet.com and ModCloth. And just this past week, PetSmart Inc. bought Chewy.com, a fast-growing online rival. Others have given up waiting for a recovery that seems always out of reach and are settling into what appears to be the new normal. “We’re planning as if the environment is not going to improve,” Jerry Storch, chief executive of Saks Fifth Avenue and Lord & Taylor parent Hudson’s Bay Co., told analysts earlier this month. In the meantime, expect more store closures, more bankruptcies (recall "According To Fitch These Eight Retailers Will File For Bankruptcy Next"), and, of course, far lower asset prices, both for retail equities and mall REITs, as well as the underlying CMBS securities that for years funded the US retail (and especially mall) bubble, which has now violently burst.

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14 апреля, 19:00

Компания J.C. Penney на месяц отложила планы по закрытию 138 магазинов

Американский ритейлер J.C. Penney заявил, что отложит планы по закрытию 138 магазинов на фоне высокого спроса, наблюдающегося в настоящее время. Так, представители компании уточнили, что ликвидационные распродажи начнутся 22 мая, хотя ранее планировалось запустить их в середине апреля, а закрытие магазинов теперь намечено на 31 июля вместо середины июня. Напомним, что компания объявила о планах по сокращению числа торговых точек в мае, причем об аналогичной программе объявили и другие представители отрасли - Macy's и Sears Holdings. J.C. Penney отметила, что в первом полугодии текущего года понесет расходы в размере $225 млн, связанные с данными мероприятиями. При этом ожидается, что благодаря данным мерам, а также закрытию двух оптовых баз удастся ежегодно экономить около $200 млн.

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14 апреля, 18:39

Компания J.C. Penney на месяц отложила планы по закрытию 138 магазинов

Американский ритейлер J.C. Penney заявил, что отложит планы по закрытию 138 магазинов на фоне высокого спроса, наблюдающегося в настоящее время. Так, представители компании уточнили, что ликвидационные распродажи начнутся 22 мая, хотя ранее планировалось запустить их в середине апреля, а закрытие магазинов теперь намечено на 31 июля вместо середины июня. Напомним, что компания объявила о планах по сокращению числа торговых точек в мае, причем об аналогичной программе объявили и другие представители отрасли - Macy's и Sears Holdings. J.C. Penney отметила, что в первом полугодии текущего года понесет расходы в размере $225 млн, связанные с данными мероприятиями. При этом ожидается, что благодаря данным мерам, а также закрытию двух оптовых баз удастся ежегодно экономить около $200 млн.

30 марта, 14:47

Stanley Black (SWK) Shows Promise with Inorganic Activities

We have issued an updated research report on Stanley Black & Decker, Inc. (SWK) on Mar 29, 2017.

30 марта, 12:05

Is It Too Late for Sears to Save Itself?

Sears Holdings has indicated that “substantial doubt” exists about its ability to continue operations. While the announcement, made in the company’s recent annual report, seems to be a white flag of surrender, it could just be a yellow warning light. Analysts say that Sears may still have time to stage a turnaround. The company says it is taking action to ensure its future viability. So what should Sears do now? Its number one priority should be to protect and restore its brand. Some of the company’s moves in recent years have generated cash and kept the business afloat at the long-term expense of its brand. Strong brands like Lands’ End gave customers a reason to shop at Sears and cast a positive halo on the Sears brand. Selling off those brands may have had short-term benefits, but it eroded the brand in the long term. The company also sold off many of its best store locations, which means brand perceptions are now being shaped only by the customer experiences in older, shabbier, and poorly located stores. Sears needs to reverse this trend. Its brand still has clout; its name is as steeped in American culture as Coke and Levi’s. Once a lifeline for customers in rural areas with few shopping options, Sears has played an important role in many people’s lives. The company can tap into this goodwill if it insulates its brand from further hits and invests in restoring it to prominence. It should start with its internal culture. CEO Eddie Lampert’s alienating management style and lack of retail prowess has prompted a mass exodus of executives and has left the company with few leaders who really care about the brand. At the store level, the company has fired employees, cut worker hours, and failed to make investments to improve the store environment. As a result, store employees are bitter, embarrassed, and unmotivated. The company must restore brand pride, alignment, and engagement throughout its ranks. Alan Mulally led the turnaround at Ford by restoring a “One Ford” mentality throughout his company and championing pride in the Ford name. Lampert and his executive team should adopt a similar effort. It would encourage managers to make strategic decisions that build the Sears brand and frontline employees to provide exceptional customer service and restore customers’ esteem of the brand. Sears should then turn its attention to improving the customer experience. Perhaps most at risk is vendor support. Suppliers that are already under tremendous pressure from the changing demands of the retail industry are probably especially leery of extending themselves with Sears. As vendors start shipping smaller quantities and being less responsive, the inventory and selection at Sears stores is going to get even worse than it already is. To ensure that a strong product assortment can draw people into its stores, Sears should work on buttressing relationships with the vendors of its top brands. Of course, there are many other aspects of the customer experience that need to improve, but Sears would be wise to start with what made its brand great in the first place: a great selection of products. Sears can take a cue from Marvel. After it filed for bankruptcy, back in 1996, Marvel leveraged its portfolio of popular brands, including Captain America and Iron Man, to stage a comeback. By tapping into the fan bases of individual character brands and producing movies that used a tried-and-true formula of superheroes being pitted against evil forces while dealing with real-world issues, the company was able to restore the Marvel brand to popularity. In the same way, Sears should draw on the equity of product brands such as Kenmore Appliances, DieHard batteries, and Sesame Street products. The company should also void the recent deal to sell off the Craftsman brand, if possible. Sears needs to promote these brands more strongly than ever before, and draft off the demand and appeal they enjoy. Most important, to restore its brand value and power, Sears needs to make some sort of big, bold, visible move. It can’t simply tweak a few things and set its sights on surviving. That’s what happened at RadioShack. After that company declared bankruptcy, its new owners promised to reinvigorate the brand. It signed up hip celebrities as endorsers, closed some stores, and adjusted its assortment strategy. But to most people, RadioShack didn’t seem all that different. Sears must make a substantive change that not only gets people’s attention but also dramatically improves the customer experience. Consider Delta Air Lines’s merger with Northwest Airlines. After declaring bankruptcy, Delta was looking for a way to emerge as a leader in the industry — to get ahead, not just level the playing field. So it made what was a foresighted decision at the time and significantly expanded its routes by merging with another airline. CEO Richard Anderson has described the move as a deliberate choice to break away from the fray: “Our company decided that we would be different.” Lampert and his colleagues must make a similarly calculated and courageous move, whether that’s to merge with another retailer, integrate vertically, change the Sears store format, slash its apparel offering, or something else. Whatever it is, the objective should be to strengthen the Sears brand (i.e., don’t acquire another retailer and operate it separately) and to create more value for its core customers. It might be too late to save Sears. The company has drained the brand of so much equity that it’s difficult to envision a recovery. But if the company remains committed to reviving the business, its brand should be the top priority.

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28 марта, 12:33

Крупнейший акционер Sears приобрел дополнительную долю в компании

В понедельник, 27 марта, появились сообщения о том, что крупнейший акционер американского ритейлера Sears Holding приобрел дополнительный пакет акций компании, в результате чего ее бумаги достигали в ходе вчерашней торговой сессии максимального за последние два месяца уровня. Так, сообщается, что крупнейший акционер и СЕО Sears Holding Эдвард Ламперт (Edward Lampert) в период со среды по пятницу выкупил дополнительно 507936 акций компании на сумму около $4,2 млн, увеличив, таким образом, свою долю до 31,84 млн акций, что эквивалентно почти 30% от общего количества бумаг, находящихся в обращении. Заметим, что на минувшей неделе Fairholme Capital Management, второй по величине акционер Sears, приобрел более 600000 акций последней.

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28 марта, 10:00

Крупнейший акционер Sears приобрел дополнительную долю в компании

В понедельник, 27 марта, появились сообщения о том, что крупнейший акционер американского ритейлера Sears Holding приобрел дополнительный пакет акций компании, в результате чего ее бумаги достигали в ходе вчерашней торговой сессии максимального за последние два месяца уровня. Так, сообщается, что крупнейший акционер и СЕО Sears Holding Эдвард Ламперт (Edward Lampert) в период со среды по пятницу выкупил дополнительно 507936 акций компании на сумму около $4,2 млн, увеличив, таким образом, свою долю до 31,84 млн акций, что эквивалентно почти 30% от общего количества бумаг, находящихся в обращении. Заметим, что на минувшей неделе Fairholme Capital Management, второй по величине акционер Sears, приобрел более 600000 акций последней.

27 марта, 18:10

Is a Wave of Store Closures Troubling Retail ETFs?

The retail sector has the lowest Zacks Sector Rank with more of negative earnings estimate revision in recent past, indicating a bearish outlook and negative investor sentiment.

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24 марта, 01:55

The "Retail Apocalypse" Is Officially Descending Upon America

Authored by Carey Wedler via TheAntiMedia.org, Consumerism has long been a defining element of American society, but retail giants are now shutting down thousands of their locations amid a long-anticipated “retail apocalypse." BI reports that over the next couple months, more than 3,500 stores are expected to close: “Department stores like JCPenney, Macy’s, Sears, and Kmart are among the companies shutting down stores, along with middle-of-the-mall chains like Crocs, BCBG, Abercrombie & Fitch, and Guess.” Some stores, like Bebe and The Limited, are closing all of their locations to focus more on online sales. Other larger chains, like JC Penney, are “aggressively paring down their store counts to unload unprofitable locations and try to staunch losses,” Business Insider notes. Sears and K-Mart are following a similar trajectory moving forward. Sears is shutting down 150 Sears and Kmart locations, about 10% of their shops. JCPenney is shutting down 138 stores, about 14% of their total locations. These closures are the consequence of several different factors. First, the United States has more shopping mall square footage per person than other parts of the world. In America, retailers reserve 23.5 square feet per person; in Canada and Australia, the countries with the second- and third-most space have 16.4 and 11.1, respectively. Another reason retail brick and mortars are failing is the growth of e-commerce. Between 2010 and 2013, visits to shopping malls declined 50%, according to data from real estate research firm Cushman and Wakefield. Meanwhile, online sales from huge online outposts, like Amazon, have exploded. Back in 2015, Forbes observed this trend: “Earlier this year, the stock market value of Amazon.com surpassed that of Walmart, a turn of events that many saw as indicative of how badly brick-and-mortar big box retailers have lagged behind in building up their e-commerce.”     “Walmart is now hustling to bridge the gap, pouring billions into its tech to claw back some market share. Target, also a laggard, is similarly spending as much on tech as on its 1,800 stores. Both those companies, though, generate digital sales that are still only a small percentage of total sales, and a fraction of Amazon’s.” At that time, Business Insider noted: “The list of failures is getting longer by the day. Macy’s? Cooked – down 42% over the past six months. Nordstrom? Down 20% over the same timeframe. Dick’s Sporting Goods? Awful earnings sent this athletic retailer lower more than 10% yesterday alone. There’s absolutely no way to sugarcoat it—the retail sector is crashing.” Though Americans increasingly prefer to shop online, their preferences are also changing. Shoppers are choosing to spend their money on “restaurants, travel, and technology than ever before, while spending less on apparel and accessories,” Business Insider reports. Further, as longtime retail analyst Howard Davidowitz observed in 2014, “What’s going on is the customers don’t have the fucking money. That’s it. This isn’t rocket science.” As prosperity declines, shopping habits shift, and major retailers like Macy’s, Sears, and JCPenney close their doors, their decisions are likely to have ripple effects on smaller stores in shopping malls. Business Insider explains that in addition to dwindling attendance and income for mall owners, major department store closures can trigger “‘co-tenancy clauses’ that allow the other mall tenants to terminate their leases or renegotiate the terms, typically with a period of lower rents, until another retailer moves into the anchor space.” As fewer retail giants seek retail space, many malls are facing dire fates, and many expect low-performing malls to be hit hardest by the changing scope of retail, noting roughly 30% of malls will face increased risk of shutting down.   Shopping malls first became popular in the economically fruitful era of the 1950s and 60s. Inspired by major department stores of the 19th century — like Sears and Macy’s, which are now struggling — 20th-century malls grew rapidly, in part, because of government subsidies provided in the form of tax breaks. Smithsonian Magazine has explained that over the decades, real estate developers overshot their expectations, constructing increasing numbers of malls despite a lack of population growth. By 1999, the downward trend we see intensifying today had already begun: “Shopping centers that hadn’t been renovated in years began to show signs of wear and tear, and the middle-aged, middle-class shoppers that once flooded their shops began to disappear, turning the once sterile suburban shopping centers into perceived havens for crime. Increasingly rundown and redundant, malls started turning into ghost towns—first losing shoppers and then losing stores.” Almost twenty years later, the trend has only intensified, and retailers are evidently bracing for an even deeper plunge. As CNBC noted earlier this year: “At $12.7 billion, U.S. department store revenue is $7.2 billion lower than it was in 2001, according to the U.S. Census Bureau. Expect these trends to continue.”

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23 марта, 20:26

Sears Enters Death Spiral: Vendors Halt Shipments, Insurers Bail

When we commented yesterday morning on the unexpected "going concern" notice in Sears' just filed 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." As it turned out, we wouldn't have long to wait, because overnight Reuters reported that the worst case Sears scenario we envisioned for Sears is now taking shape and that suppliers to Sears have told Reuters they are doubling down on 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 company's disclosure turned the focus to its vendors as tension is expected to mount ahead of the key fourth-quarter selling season amid rising concern about a potential bankruptcy, they said. Quoted by Reuters, 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." Another supplier to Sears, Arnold Kamler, CEO of New Jersey-based bicycle manufacturer and importer Kent International Inc, said he was not surprised by Sears' Tuesday announcement. He said he noticed a warning sign last year when Sears pushed to increase its purchases, which occurred "because a lot of their current suppliers were either cutting them off or limited them on credit." Kamler said he declined to sell Sears more product and that he receives a report once a week from his accounting department because of concerns around billing, payments and deductions. The Bangladesh-based clothing supplier said Sears' announcement is making him re-evaluate accepting new orders. "So far there was only speculation that they would declare bankruptcy in 2017. But now they are acknowledging it, which definitely complicates our relationship with them and our decision to accept future orders from Sears," the executive said. A second clothing supplier from Bangladesh who did not wish to be named said he renegotiated payment terms with Sears a year ago and was being paid within 15 days of sending a shipment, compared with the traditional 60 days. He is considering asking the company for an advance payment on orders going forward. * * * Sears disagreed, and according to Jason Hollar, the company's CFO, Sears' move to raise capital in recent months is helping strengthen the company's balance sheet he claimed in a blog post. Sears is "a viable business that can meet its financial and other obligations for the foreseeable future," Hollar said. He cited a $1 billion increase in liquidity from a new secured loan facility and a new asset-based loan that provided $250 million more in "financial flexibility." The only problem with this is that Sears continues to be a melting ice cube which while not as bad as Tesla, is burning through hundreds of millions each year, money which in recent years has come out of Eddie Lampert's pocket, either directly or indirectly, with loan gurantees. At some point even Lampert will realize that throwing away billions to sustain the Sears zombie is no longer a viable strategy, especially if the vendor freak out prompts a sudden need for cash which the company does not have. Speaking of Sears' cash, here are some more details from Reuters: Sears' cash position has shrunk dramatically in recent years. Sears, which lost $2.22 billion in the year ended Jan. 28, 2017, had $286 million in cash on hand, down from $609 million in 2012. Retailers in distress often use their accounts receivable to finance operations, and Sears had $466 million in receivables, down from $635 million in 2012. So is a bankrtupcy inevitable? Well, yes, and increasingly so with every passing day that the company avoids filing. Neil Saunders, managing director at retail research firm GlobalData, said tension will grow as the year goes on. "As we move towards the last quarter, I think we'll find there are more and more suppliers that are not necessarily willing to engage with Sears" and will demand cash up-front.   Another sign of Sears' weakness is that insurance companies that once provided policies to Sears vendors - insuring against nonpayment for their goods - are no longer doing so.   Doug Collins, regional director for risk services at Atradius Trade Credit Insurance, said his firm has stopped providing insurance to Sears vendors. "We tried to hang in as long as we could," he said. "Vendors may try to get a few more cycles in before the worst happens, and then it just depends if they're lucky or not." Of course, if that's the case, then Sears has nothing to worry about: if the past 9 years of trading this "market" has shown, is that luck - or hope - is the only strategy that matters for this market, and courtesy of central banks, it always somehow shows up in the last moment.

23 марта, 14:45

Frontrunning: March 24

Republicans Struggle to Unite on Health Bill (WSJ) Trump Still Negotiating in Bid to Save Healthcare Bill Before Vote (BBG) Trump Tantrum looms on Wall Street if healthcare effort stalls (Reuters) High stakes for Trump in vote on healthcare plan (Reuters) GOP Lawmaker Sparks New Battle Over Trump Spy Claim (WSJ) Lawmaker says U.S. foreign surveillance 'unmasked' Trump associates (Reuters) Arrests mount after UK parliament attack (Reuters) Trump Jr. Called a 'Disgrace' for Criticizing London Mayor  (BBG) 'What a mad world' says minister who tried to save wounded officer in parliament (Reuters) U.S. embassies ordered to identify population groups for tougher visa screening (Reuters) SNB Spent 67.1 Billion Francs on Currency Interventions in 2016 (BBG) 0% Financing Deals Bite Back Retailers as Fed Raises Rates (WSJ) Where De Beers Hid Its $5 Billion Diamond Stash (BBG) Democrats Seize on Disability Ruling in Opposing Gorsuch (WSJ) Inside the Troubled Kushner Tower: Empty Offices and Mounting Debt by Caleb Melby  and David Kocieniewski March (BBG) Inside Alabama’s Auto Jobs Boom: Cheap Wages, Little Training, Crushed Limbs (BBG) Teva to Cut as Many as 6,000 Jobs: Israeli Newspaper (BBG) Stanford’s New Freshman Class Is for Successful Retirees (BBG)  China says U.S. should respect China's air defense zone (Reuters) Drugmakers Take to Airwaves to Counter Trump's `Murder' Charge (BBG)   Overnight Media Digest WSJ - Elliott Management Corp, one of the biggest activist investors in the U.S., is pushing Dutch paint and chemicals giant Akzo Nobel NV — which traces its roots in part to dynamite inventor Alfred Nobel—to enter into talks with PPG Industries Inc, a Pittsburgh-based rival. http://on.wsj.com/2muLioW - AT&T Inc and Verizon Communications Inc joined a growing number of companies pulling much of their advertising from Google, expanding a controversy over the internet giant's ad placements on objectionable content and deepening the financial impact on the company even after it announced measures to assuage concerns. http://on.wsj.com/2muPa9x - Sears Holdings Corp's raised doubts in a securities filing about its ability to keep operating after seven years of losses, sending the retailer's share price tumbling and spooking some of its landlords. http://on.wsj.com/2muElUF - Nike Inc said a sneaker homage to the cult classic film "Space Jam" was a smash hit, but the retro shoes were a rare highlight in otherwise troubling results for the world's largest athletic company. http://on.wsj.com/2muLnce - Nick Denton will leave bankruptcy having weathered a multimillion-dollar judgment from an invasion-of-privacy lawsuit that forced the chapter 11 sale of his Gawker media business. http://on.wsj.com/2muB9bW - Starbucks Corp plans to hire more U.S. military veterans and their spouses after facing backlash over its promise to hire refugees. Presiding over his last annual shareholders meeting as chief executive, Howard Schultz said Starbucks will hire 15,000 veterans and their spouses by 2025, on top of more than 10,000 hired since a pledge he made four years ago. http://on.wsj.com/2muFDiB - General Electric Co said it would double its planned cost cuts in industrial operations over two years and more closely tie top executives' bonuses to profit in its core business. http://on.wsj.com/2muJEUe - China Petroleum & Chemical Corp said it would acquire controlling stakes in Chevron Corp's businesses in South Africa and Botswana, in a roughly $900 million deal that underscores the ambition of China's struggling oil companies to earn more money abroad as profits shrink at home. http://on.wsj.com/2muLfJw   FT One of Britain's biggest water companies, Thames Water, was handed a record 20 million pound ($25 million) fine on Wednesday for pumping sewage into the River Thames. Two of UK's biggest teaching unions, the National Union of Teachers and the Association of Teachers and Lecturers, will merge to form the National Education Union with more than 450,000 members. Britain's markets watchdog did not wrongfully identify a former JPMorgan executive in the "London Whale" scandal, the Supreme Court ruled on Wednesday in a landmark case that endorses a regulatory policy of speedy corporate settlements.   NYT - Federal prosecutors are investigating North Korea's possible role in the theft of $81 million from the central bank of Bangladesh in what security officials fear could be a new front in cyberwarfare. http://nyti.ms/2nfjR11 - AT&T and Johnson & Johnson, among the biggest advertisers in the United States, were among several companies to say on Wednesday that they would stop their ads from running on YouTube and other Google properties amid concern that Google is not doing enough to prevent brands from appearing next to offensive material, like hate speech. http://nyti.ms/2nEPwKs - Akzo Nobel, the Dutch paint and chemicals company that makes Dulux paint, said on Wednesday that it had rejected a second takeover bid from PPG Industries, turning away a $24 billion deal that would have created an industry behemoth. http://nyti.ms/2mSvzeG - President Trump's second pick to lead the Labor Department told senators on Wednesday that he would not allow partisan political considerations or conservative ideologues to shape his department, pushing back against accusations by Democrats that he had looked away as subordinates at the Justice Department stacked his office with ideological allies during the George W. Bush administration. http://nyti.ms/2npSNwr   Canada THE GLOBE AND MAIL ** Finance Minister Bill Morneau has put off tax hikes on wealthier Canadians, delivering a budget Wednesday that promises new money for job training, child care and social housing but offers no plan to improve the country's debt outlook. https://tgam.ca/2neJZJk ** The Asian Infrastructure Investment Bank has made Canada a prospective member, welcoming Ottawa into an institution that marks one of China's leading efforts to take a place of global leadership. https://tgam.ca/2nqU6LQ ** Mounting troubles at U.S. parent Sears Holdings Corp raise questions about the fate of Sears Canada Inc , which has also suffered from declining financial results. https://tgam.ca/2n8nNij NATIONAL POST ** Vancouver-based streaming company Silver Wheaton Corp is proposing a name change to Wheaton Precious Metals Corp as it seeks a brand that better reflects the increasingly large contribution gold is making to its bottom line. http://bit.ly/2nUIRsF ** Trican Well Service Ltd said it would issue new shares to buy fracking competitor Canyon Services Group Inc for C$637 million ($478 million) Wednesday even though both companies have oilfield service equipment sitting idle. http://bit.ly/2mTNwJF ** Restaurant chain Freshii Inc posted strong sales at locations open for more than a year in its first quarter as a public company as it pursues an aggressive global expansion plan. http://bit.ly/2o7T30q   Britain The Times Centrica Plc gave its chief executive a 37 per cent pay rise last year, to 4.2 million pounds ($5.24 million), despite freezing its payouts to investors. http://bit.ly/2n95IRq Geely, the Chinese carmaker, has revealed plans to launch Britain's first dedicated electric van manufacturing plant in the factory it built in Coventry to assemble battery-driven black cabs. http://bit.ly/2n8YU6n The Guardian Several of Heineken N.V.'s brands have been absent from Tesco Plc shelves for six weeks after annual talks over pricing ended in a stalemate. http://bit.ly/2ndKqUc More than 1,000 jobs are at risk after shoe retailer Brantano collapsed into administration. http://bit.ly/2n93zVD The Telegraph First Utility has set its sights on the broadband sector in an attempt to widen its consumer appeal as retail competition heats up. http://bit.ly/2n97HFs The owner of The Guardian and The Observer newspapers is to make compulsory redundancies for the first time in its history as management attempts to stem years of financial losses. http://bit.ly/2ndYxZC Sky News An unarmed police officer who was among four victims of a terror attack in Westminster has been named as PC Keith Palmer. http://bit.ly/2n98zd4 The Independent Amer Sajed, one of Barclays Plc's senior-most executives, is retiring to fight for civil liberties in U.S. http://ind.pn/2n91RDG Thames Water has been fined 20.3 million pounds for polluting the River Thames with 1.4 billion litres of raw sewage. http://ind.pn/2n98HJz  

Выбор редакции
23 марта, 04:08

With Sears' future in doubt, vendors begin pulling back

(Reuters) - Suppliers to Sears Holdings Corp told Reuters they are doubling down on 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.

23 марта, 02:08

Sears (SHLD) Stock Plummets 12% After SEC Filing Clouds Future

When was the last time that you stepped foot in a Sears retail store? Customers might find themselves unable to locate their familiar Sears store soon.