07-02-2020, 02:59 PM
I haven't been keeping up here. Some others from May (CNN)
Gold's Gym
Gyms were especially vulnerable to the COVID-19 outbreak. Just think of all the heavy breathing. Working out is good for general health (just avoid the steroids, of course). People are pushing themselves in a gym, huffing and puffing, and anyone contagious with a respiratory ailment really gets to spread it around. But most businesses are anything but cash-rich these days. Cash reserves? Not in style except for banks, insurance companies, and brokerage firms.
OK, if you have ever played the game Monopoly ™, you have learned that investments pay off, and having a tidy reserve won't help you if you land on Boardwalk or Park Place with a hotel on it. When it comes to bankruptcy, going bankrupt and insolvent by $50K and $5 billion has the same effect on you. It's not in the same league as choosing to be hanged for a lamb or a sheep, so you might as well steal a sheep.
Hertz
Question: will people keep doing teleconferences once the plague is over? If so, then not only the airline industry is reduced to practically the tourist trade that isn't so lucrative as business travel.
COVID-19 is a legitimate Crisis Era event. Know well: American capitalism is remarkably inept at scaling back operations. We may be in big trouble until the mom-and-pop outfits take over in the wake of the economic equivalent of the K-T boundary in paleontology.
If you don't know what the K-T boundary is, that boundary delineates the great meteor strike that killed off practically all land and air creatures bigger than house cats and some terrier dogs. The dinosaurs did not quite go extinct; the only surviving dinosaurs are birds.
Humanity would probably not survive such a meteor strike.
J.Crew Group
If mom-and-pop businesses flourished in the last 1T, then maybe they will be the norm in the next 1T. Progressive taxes and the absence of a Soviet-style nomenklatura will be good for keeping small scale and limited geographic scope as a norm... once the economy gets through the economic equivalent of the K-T boundary.
Neiman Marcus
Remember the three words that I associate with excessive leveraging: debt, death, and dead. They apply as much to luxury retailers as they do to the more proletarian Sears and JC Penney, and they tend to come together at the first sign of a financial panic..
Tuesday Morning
Discount retailing may be unsustainable in the wake of the end of scarcity. Over-runs, factory returns, and seasonal junk may be harder to sell. Plenty of sellers and few buyers?
https://www.cnn.com/2020/05/29/business/...index.html
Gold's Gym
Quote:Gold's Gym said in its May 5 fling that the virus has affected it "deeply and in many ways," which includes the temporary closures of many of its 700 global gyms. Filing for Chapter 11 bankruptcy protection will help it "emerge stronger and ready to grow," the statement continued.
The 55-year-old company intends to exit bankruptcy by August and said it is "absolutely not going anywhere." Gold's did shutter 30 locations in April, but it doesn't intend to permanently close any more gyms.
Gyms were especially vulnerable to the COVID-19 outbreak. Just think of all the heavy breathing. Working out is good for general health (just avoid the steroids, of course). People are pushing themselves in a gym, huffing and puffing, and anyone contagious with a respiratory ailment really gets to spread it around. But most businesses are anything but cash-rich these days. Cash reserves? Not in style except for banks, insurance companies, and brokerage firms.
OK, if you have ever played the game Monopoly ™, you have learned that investments pay off, and having a tidy reserve won't help you if you land on Boardwalk or Park Place with a hotel on it. When it comes to bankruptcy, going bankrupt and insolvent by $50K and $5 billion has the same effect on you. It's not in the same league as choosing to be hanged for a lamb or a sheep, so you might as well steal a sheep.
Hertz
Quote:Car rental giant Hertz filed for bankruptcy on May 22. The company also rents cars under the brands Dollar, Thrifty and Firefly.Service companies with huge capital costs are vulnerable to any shock. The rental car business depends heavily upon air travel. If air travel plummets (and anyone taking any form of mass transportation during the Plague of 2020 is a fool these days), then so does the business in real-estate rentals. So suppose that you are in Philadelphia and most conduct business in Santa Rosa, California. You fly to San Francisco International Airport (SFO) from Philly, rent a car at SFO, and take about a 60-mile drive to Santa Rosa. Santa Rosa does not have a good airport, the last that I knew, and even if it did, you would rent a car in Santa Rosa. People are relying more upon teleconferences for business.
The company has been in business since 1918, when it set up shop with a dozen Ford Model Ts. Hertz has survived the Great Depression, World War II's near-total halt of US auto production and numerous oil price shocks.By declaring bankruptcy, the rental car company says it intends to stay in business while restructuring its debts so it can emerge financially healthier.
"The impact of Covid-19 on travel demand was sudden and dramatic, causing an abrupt decline in the company's revenue and future bookings," the company said in a statement, noting that "uncertainty remains as to when revenue will return and when the used-car market will fully re-open for sales, which necessitated today's action."
Hertz was criticized for paying out millions of dollars in bonuses to its executives just before its bankruptcy -- and a month after it started laying off thousands of employees.
It paid a total of $16.2 million to 340 executives on May 19 as part of a plan to keep them in place while the company attempts to reorganize, according to a filing with the Securities and Exchange Commission.
Question: will people keep doing teleconferences once the plague is over? If so, then not only the airline industry is reduced to practically the tourist trade that isn't so lucrative as business travel.
COVID-19 is a legitimate Crisis Era event. Know well: American capitalism is remarkably inept at scaling back operations. We may be in big trouble until the mom-and-pop outfits take over in the wake of the economic equivalent of the K-T boundary in paleontology.
If you don't know what the K-T boundary is, that boundary delineates the great meteor strike that killed off practically all land and air creatures bigger than house cats and some terrier dogs. The dinosaurs did not quite go extinct; the only surviving dinosaurs are birds.
Humanity would probably not survive such a meteor strike.
J.Crew Group
Quote:It's a distinction no one wants: J. Crew Group became first national US retailer to file for bankruptcy protection since the coronavirus pandemic forced a wave of store closures. It filed on May 4.As I suggested elsewhere it may not be coincidence that in the retail business, the words debt, death, and dead end in similar phonemes. Obviously "dead" and "death" are etymologically related and otherwise sound identical; debt is related as a cause., if not in etymology. I see a pattern likely to emerge in the 1T: that businesses will sacrifice the prospect of growth and expansion so that they can have cash reserves in the event of a calamity such as "COVID-25"... should such bedevil us five years from now.
The company, which owns the preppy J.Crew and Madewell brands, expects to stay in business and emerge from bankruptcy as a profitable company. And Madewell, the fast-growing denim brand that had been slated for an IPO, will remain part of the business.
J.Crew Group was saddled by a heavy debt load since its 2011 purchase from private equity firms TPG Capital and Leonard Green & Partners in a $3 billion deal.
It had grown rapidly in the nine years since the transaction was completed, nearly doubling the number of stores. But it has also accumulated far more debt. It had $50 million of long-term debt on its books in 2010, before the deal was announced -- and as of February of this year that number had ballooned to $1.7 billion.
The company operates nearly 500 stores including J.Crew's factory outlets.
If mom-and-pop businesses flourished in the last 1T, then maybe they will be the norm in the next 1T. Progressive taxes and the absence of a Soviet-style nomenklatura will be good for keeping small scale and limited geographic scope as a norm... once the economy gets through the economic equivalent of the K-T boundary.
Neiman Marcus
Quote:Luxury retailer Neiman Marcus, which filed for bankruptcy on May 7, said the restructuring agreement with creditors will allow it to "substantially reduce debt and position the company for long-term growth."On the first page of this thread I suggested that the downfall of any luxury brand would indicate deep trouble for America as a whole, not so much because the non-rich would miss nothing (unless as employees), but instead because such indicates that their clientele isn't spending the money as it did. The problem with Neiman-Marcus is that someone paid too much for the business.
The company's history goes back 113 years to its first store in Dallas, which is still its home base. The company also operates the Bergdorf Goodman and Last Call chains.
Neiman had 69 stores among the three brands as of last year. In March, just days before the pandemic prompted mass store closings, the company announced plans to permanently close a "majority" of its 22 Last Call outlet stores.
ITS fate was very possibly sealed in 2013 when Ares Management and the Canada Pension Plan Investment Board paid $6 billion in a leveraged buyout, taking the company private.
"The big issue with Neiman is that the [private equity companies] paid too much and layered on too much debt," Steve Dennis, a retail consultant and former Neiman executive, previously told CNN Business.
Remember the three words that I associate with excessive leveraging: debt, death, and dead. They apply as much to luxury retailers as they do to the more proletarian Sears and JC Penney, and they tend to come together at the first sign of a financial panic..
Tuesday Morning
Quote:Discount home goods retailer Tuesday Morning (TUES) blamed the virus for prolonged store closures that caused an "insurmountable financial hurdle."
CEO Steve Becker said the business was thriving before the pandemic. But the resulting temporary store closures and employee furloughs had "severe consequences on our business."
"The complete halt of store operations for two months put the company in a financial position that can be effectively addressed only through a reorganization in Chapter 11," he said in a statement.
The Dallas-based chain, which filed on May 27, said it will permanently close approximately 230 of its nearly 700 US stores.
--CNN Business' Chris Isidore and Nathaniel Meyersohn contributed to this report.
Discount retailing may be unsustainable in the wake of the end of scarcity. Over-runs, factory returns, and seasonal junk may be harder to sell. Plenty of sellers and few buyers?
https://www.cnn.com/2020/05/29/business/...index.html
The ideal subject of totalitarian rule is not the convinced Nazi or the dedicated Communist but instead the people for whom the distinction between fact and fiction, true and false, no longer exists -- Hannah Arendt.