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US: Stores closings - road to hell
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  • Best Buy Co Inc (BBY.N), the No. 1 U.S. consumer electronics retailer, on Wednesday said it will shut 250 small mobile phone stores in U.S. malls as it looks for ways to operate more profitably and turn around its business amid intense competition.

    https://www.reuters.com/article/us-best-buy-stores/best-buy-plans-to-shut-250-small-u-s-mobile-phone-stores-idUSKCN1GC3D2

  • Toy store chain Toys R Us is planning to sell or close all 800 of its U.S. stores, affecting as many as 33,000 jobs as the company winds down its operations after six decades, according to a source familiar with the matter.

    There were reports earlier this week that Toys R Us had stopped paying its suppliers, which include the country’s largest toy makers. On Wednesday, the company announced it would close all 100 of its U.K. stores. In the United States, the company told employees closures would likely occur over time, and not all at once, according to the source, who spoke on the condition of anonymity because they were not authorized to discuss internal deliberations.

    Amazon share comes not from nothing.

  • It also didn't help that Toys R Us was dealing with 250 million in payments per years toward 5 billion dollars in debt due as a result of private equity firms taking it private.

  • As a result of the liquidation of Toys R Us, 30,000 employees have lost their jobs and they are also not receiving the severance packages they expected. Employees were blindsided by the bankruptcy and are now facing a precarious situation of possible unemployment.

  • Toys R Us failed to keep up with a strong online presence. They should have started closing the smaller stores and put more $ into net sales and teaming up with ebay or the like. Couple that with horrible management, you have 30k people losing their jobs.

  • @rockroadpix

    It is such, but also you miss important thing. For such grow rates of Amazon someone must fall, it is monopoly rising.

  • Didn't miss it, but sometimes for monopolies to rise, other companies fail to grasp the what is next down the road and they don't move quickly enough.

  • @rockroadpix

    It is common error you are making.

    In such competition someone always wins, you can blame others for management errors, but usually smaller ones are closing and loosing as they do not have unlimited funds and enough leverage on manufacturers.

    Amazon is sample of new financial capital approach - make artificial monopolies and do so by working without profits or even with big losses until you wipe competition out.

  • Are you joking, @rockroadpix?

    The reasons for Toys R Us closing are pretty well-understood and while competition from online retailers was definitely an issue, the inability to handle it was a symptom, not the root cause.

    The main reason has to do with a huge debt-financed buyout by a few private equity firms (including Bain), which jumped their debt from 1.6 billion to something like 6.5 billion - which with generally flat sales (about 11 billion). With so much debt, paying back interest consumed 97% of their operating profit.

    https://www.theatlantic.com/magazine/archive/2018/07/toys-r-us-bankruptcy-private-equity/561758/

    Whenever you hear of a retailer closing and people start blaming Amazon for it, do a quick google search to see if they were bought out buy a private equity firm and how much it increased their debt. Then check how much the people in charge of the equity firm payed themselves for completion of the acquisition. Then get disgusted at how the people in charge gave themselves hundreds of million of dollars while 30k people lost their jobs.

  • @eatstoomuchjam - Not joking. Where did I say it was Amazon's fault? Please point that out.

  • @rockroadpix

    I think Amazon is from my post.

  • @rockroadpix Sorry, yeah. I grabbed Amazon from VK's post, but you mentioned their lack of a stronger online presence in yours which I conflated with that. That part was my mistake

    Were there unprofitable stores that they should have proactively shut down? Maybe. I don't have any insight into store-by-store performance.

    Should they have teamed up with another major online retailer? Maybe? There aren't a ton of successful partnerships like that to point to which are clearly/obviously contributing substantially to the classic retailer's bottom line.

    Should they have had more online presence? Probably.

    Was the management horrible? Maybe. I have no insight into that either.

    There are a lot of contributing factors to the downfall, the weights of which could be debated at length, but one thing is for absolute certain - a recipe for continued health of a company is not to buy it, pay yourself a huge bonus for it, and increase their debt to the point where the interest accounts for 97% of operating profit. That gives them absolutely no margin for error or budget to innovate (without taking on additional debt).

  • I lived 3 doors down from one of their head accountant guys 2004-12. Things weren't peachy before the ilk of Romney set in. I am not saying you are not wrong, just that they were running things in an antiquated fashion. They took over the market from other retailers, then they were taken over.

  • I totally believe you that they weren't cutting-edge - but bear in mind that updating systems costs money. 2004 is right around the time they were acquired (2005) so most of your friend's time was there during the Romney age.

    And from the article that I linked...

    The company eliminated positions, loading responsibilities onto other workers. Schedules became unpredictable.

    If the company was struggling with antiquated systems before, eliminating staff and offloading their responsibility on other workers without investing in upgrading the systems is not a recipe for future success... and one of the primary pitches of a private equity company is that they come in and improve bad systems. If they come in and explode a company's debt without either significantly decreasing costs or increasing profits, then they are acting exactly like a parasite that will eventually kill its host.

    Had they not been there, Toys R Us could have presumably invested some of the profits that it was making in 2005 into modernizing and improving.

    Ever since I learned about private equity companies during some other major retailers closing, I've looked them up every time I've heard of a major retailer shutting down. The vast majority have been strangled by trying to pay interest on private equity debt.

  • The neighbor had been there for years before I knew him. You are not wrong on the other counts, though.

  • Ah, I thought you meant he was there from 2004-2012. :)

  • Nope, me... or I should say "Us"... Another thing, the dude had major issues - he lost his cert. of occupancy due to the fact that he was a hoarder and his house was considered a health hazard. It took a crew 4 days to clear the stuff out of his modestly sized home. Maybe this is all his fault.

  • Future of Retail Shopping:

    Flash mobs rob Lululemon and Apple as store clerks watch.

    They didn't get any AC adapters! Maybe Lululemon will develop a kill switch for their pants!

    https://losspreventionmedia.com/insider/retail-security/flash-mob-robbery-and-the-retail-threat/

  • Sears will file for bankruptcy

    The neverending saga of the world's longest melting ice cube, that of Sears Holdings which has flirted with bankruptcy for years only to get bailed out in the 11th hour by its biggest investor and CEO Eddie Lampert each and every time, is finally coming to its logical end.

    With its stock crashing to a new all time low, and with a $134 million in debt due on Monday on a bond issue that is currently yielding over 1,000% in the 3 or so business days left to maturity...

  • Sears is planning to close up to 150 of its department and discount stores and keep at least another 300 open, while the fate of Sears’ remaining 250 stores uncertain. 90,000 jobs are at stake, according to Sears filings.

    Sears will likely file for bankruptcy protection in New York as soon as Sunday night,

  • Lowe's closing Orchard Supply Hardware chain it acquired out of bankruptcy:

    "Sears acquired the chain in 1996 when the Chicago retail giant was looking to expand its share of the home-improvement market. In 2012, it spun off OSH as a separate business, but the newly independent company declared bankruptcy less than two years later, crushed by hundreds of millions of dollars of debt it was saddled with as part of the spin-off."

    http://www.latimes.com/business/la-fi-osh-closure-20180822-story.html

  • US Retail closings October 8, 2018

    Mattress Firm – Up to 700 stores

    Victoria’s Secret – 20 stores

    Brookstone – 102 stores

    The Fresh Market – 15 stores

    Chipotle – 65 stores

    Toys R Us – 735 stores

    Starbucks – 150 stores closing in 2019

    H&R Block – 400 locations

    Subway – 500 restaurants

    Bon-Ton Department Srore– 256 stores

    GNC Nutrition – 200 stores

    J. Crew – 20 stores

    Abercrombie & Fitch – 60 stores

    Best Buy cell phone stores – 250 stores

    J.C. Penney – 8 stores

    Sam’s Club ( Walmart) – 63 stores

    Macy’s – 11 stores

    Gap and Banana Republic – 200 stores

    Teavana ( Starbucks )– 379 stores - All stores

    Ascena Retail Group – At least 268 stores ( women clothing - Ann Taylor, Loft, Dress Barn, Lane Bryant, Justice etc)

    Michael Kors – 100 to 125 stores

    Foot Locker – 110 stores

    Sears and Kmart – Several hundred stores

    Orchard Supply Hardware – 99 stores

  • Lowe's is closing 51 stores in the US and Canada

    ...Lowe's is struggling to keep up with Home Depot. Last year, Home Depot's revenue hit more than $100 billion, while Lowe's sales were below $70 billion.

    Lowe's (LOW) will shut down 20 stores in the United States and 31 in Canada. The company said that a "majority" of the shuttered stores are within 10 miles of another Lowe's location. The stores will be closed before Feb. 1, 2019.

    https://www.cnn.com/2018/11/05/business/lowes-closures/index.html

  • Sears Holdings Corp. is preparing to potentially wind down the iconic retailer after Chairman Eddie Lampert’s bid to buy several hundred stores out of bankruptcy fell short of bankers’ qualifications, people with knowledge of the matter said.

    The retailer started laying the groundwork for a liquidation after meetings Friday in which its advisers weighed the merits of a $4.4 billion bid by Lampert’s hedge fund to buy Sears as a going concern, said the people, who asked not to be identified because the discussions are private.

    https://www.bloomberg.com/news/articles/2019-01-06/sears-said-to-prepare-for-possible-liquidation-as-esl-bid-fails?srnd=premium

  • For the second time in two years, children’s clothing retailer Gymboree Group Inc. has filed for Chapter 11 bankruptcy protection, offering the latest sign of the looming bloodbath in the retail space following stagnant foot-traffic during the holiday sales season (which was dominated by e-commerce), and the strain from higher interest rates. Gymboree, which filed late Wednesday, wasn't the only retailer to file within the last 24 hours: Department Store Shopko also filed on Wednesday.

    Gymboree will close 800 Gymboree- and Crazy 8-branded stores in the US and Canada. In its press release, the retailer said it's planning to sell its high-end children's fashion line Janie and Jack, its online platform and its intellectual property - though all of these will remain open for now as the restructuring continues.