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from Breakingviews:
Buyout risks laid bare by old strippers
By Jeffrey Goldfarb
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Naked facts about leveraged buyouts have been laid bare by some old strippers. Cerberus and Sun Capital are part of a bigger group that has agreed to pay $166 million to settle creditor claims that they pillaged and ruined Mervyn’s, a retailer they acquired from Target in 2004 for $1.25 billion. It’s a reminder of the buyout industry’s asset-stripping reputation and shows why investors can’t afford to let their guards down.
The case recalls some thrusting practices. The new owners of Mervyn’s cleaved real estate from the department store business and then began charging the chain higher rent. For the privilege, Mervyn’s also paid Cerberus, Sun and property investor Lubert-Adler some $59 million of transaction fees, according to court filings. And the creditors say Mervyn’s later borrowed $60 million to fund a special dividend for the buyers. It all conspired, so the allegations go, to drive the company into bankruptcy in 2008.
Times would have been tough for Mervyn’s anyway. It was an operation unwanted by its owner eight years ago, meaning financing might have been tough to secure without isolating the property portfolio. And when the crisis struck, the demise of specialty lender CIT hurt a big swath of the industry’s suppliers. Linens ’N Things, Circuit City and Fortunoff were among the many stores that folded.
from DealZone:
Deals wrap: eBay’s $2.4 billion GSI buy
EBay said it plans to buy e-commerce company GSI Commerce, which owns Web businesses such as the flash site Rue La La and ShopRunner, for $2.4 billion. Ebay said it will offer shareholders of GSI $29.25 per share, a 51 percent premium over its closing price on Friday.
Tabula announced $108 million in funding, one of the largest venture rounds in a decade for a chip company, writes VentureBeat’s Matt Marshall. The company says it can create programmable logic devices for $200, compared to a cost of more than $1,000 offered by competitors.
from Shop Talk:
Starbucks, coffee shops see collateral benefit from Black Friday
Black Friday bargain hunting is a marathon, requiring a shopper to be alert and aggressive to outmaneuver rivals for that last $200 LCD TV at Target. But with so many retailers opening their doors at midnight, why bother going to sleep? Even if you shopped at Kohl's, which opened at 3 am or J.C. Penney, at 4 am, you were in for very short night for most.
So bleary-eyed shoppers turned out in drove at U.S. malls on Friday, with lines at coffee shops among the longest.
from Shop Talk:
Check Out Line: Have a flu shot, spend some more
Check out the impact of signs the U.S. flu season may be weaker this year.
Drug stores such as Walgreen, CVS and Rite Aid are offering flu shots earlier and more conveniently to keep sales from slumping with no expected H1N1 outbreak this year along the lines of last year.
Last year, consumers came for flu shots and bought other items as well, but those related sales could suffer this year. Walgreen, for example, said lower demand for flu-related prescriptions cut 0.3 percentage point from its same-store sales growth in August.
from Shop Talk:
Pampers to create designer diapers
Photo courtesy of PRNewswire
Following a trend made popular by teen shops H&M and Forever21, a Procter & Gamble brand is making the leap to disposable fashion.
Literally.
Fashion designer Cynthia Rowley will create a line of Pampers diapers for Target that will include madras, stripes and ruffles, P&G said Wednesday. The collection "delivers the perfect blend of utility and aesthetics," according to the company.
from Shop Talk:
Happy Super Valenbowl!
Target spent time talking to Wall Street analysts on Thursday, outlining the multiple ways it will expand its business in the next 10 years.
It will open smaller stores in urban markets. It will add its PFresh food concept into hundreds of stores, boosting customer traffic. It will explore overseas expansion in Canada, Mexico or Latin America.
from Shop Talk:
Target wants shoppers to squeeze the (supersized) Charmin
Grab that shopping cart - you're going to need it.
To lure post holiday shoppers this year, Target has scrapped its typical plan of stocking its stores with exotic home goods sourced from across this globe.
Instead, it has cleared out the Christmas trees and holiday lights to make room for a mini warehouse club.
from Shop Talk:
Safeway, Walmart top list of most wanted gift cards
While giving gift cards may have declined in popularity, some are proving quite attention-worthy and can be cashed in for a pretty penny. Online gift card site plasticjungle.com buys gift cards for cash, and then resells them, often for a bit less than the amount left on the card. It also lets people donate cards to charities.
So, what stores are hot this holiday season?
Here are the cards the site is paying the most for -- up to 90 percent of the face value:
from Shop Talk:
Check Out Line: More holiday reality checks from retailers
Check out more retailers reminding Wall Street that all is not well on Main Street.
On Friday morning, AnnTaylor Stores reported lower-than-expected quarterly revenue and gave a cautious forecast for the current holiday quarter.
from From Reuters.com:
The day ahead: Tuesday
Home Depot reports quarterly earnings. The top home improvement chain has been banking on a slow-but-steady growth strategy and cost cuts to fight lackluster demand for big-ticket remodeling projects.
Other highlights:
* Brian Moynihan, on the short-list of CEO candidates at Bank of America, is expected to testify at a House Oversight Committee hearing.
