Shop Talk
Retailers, consumers and prices
Time to make the donuts, file for bankruptcy
Dunkin’ Donuts franchise operator Kainos Partners Holding Company LLC became one of the latest companies to file for bankruptcy on Monday.
The company cited customers under extreme financial stress, as well as higher food costs, in its filing. It follows two other Dunkin’ Donuts franchisees who filed for bankruptcy in June.
Another issue at Kainos? The company said it found out that its CFO had engaged in $420,000 worth of financial transactions involving company assets for his personal use. The executive was fired in February.
Seems like times have changed a bit for the company. Kainos Partners received Dunkin Brands Rising Star of the year award for 2006 and Developer of the Year for 2007.
(Reuters photo)
It’s deja vu at Arcandor, but this time the lifeline slipped
It’s deja vu at Arcandor. Five years ago, the company was still called KarstadtQuelle and it was on the brink of insolvency. It took a dramatic last-minute rescue to save the company. Today, it finally filed for insolvency.
In 2004, the company said part of the problem was that there were not enough customers at its department stores, or at least those that were there were not spending enough. And consumers were not ordering enough goods from its hefty mail-order catalogs, Quelle and Neckermann.
This year, there are still “huge problem areas” Chief Executive Karl-Gerhard Eick said to shareholders last month. The company has changed its name, sold dozens of stores, dumped real estate, revamped its stores and tried to win more online customers for mail-order.
But here we are again. Fresh live TV spots with company representatives telling us how dire the situation is. Same image, different year. Not enough spending at its 120 stores, which sit squarely in the main shopping districts of German city centers. So far, the company has been trying to lure more consumers by trading up and offering more premium brands and getting customers to spend more than they’d planned to when they walked into the store. It has spent 3.1 billion euros on restructuring, with little to show for it.
Now that Metro is pushing to take over Arcandor’s stores, the company’s agony could finally come to an end.
(Reuters photo of Arcandor CEO Karl-Gerhard Eick)
Consumer bankruptcy filings jump in May
More Americans filed for bankruptcy in May, slammed by job losses and home forclosures, according to the latest data from the American Bankruptcy Institute.
More than 124,800 people sought protection from their creditors in bankruptcy court, up 37 percent from last year.
Business bankruptcies also soared 40 percent in May, according to bankruptcy data provider AACER.
According to AACER’s Mike Bickford, personal and business bankruptcies will continue to rise, even if the economy gets better.
“Bankruptcy always has a lag effect,” said Bickford. “People start filing months after they start having credit problems.”
What do you see in your community?
Thanks for introducing this, but now every company and individual is opting for filing bankruptcy. for individual its good to file online bankruptcy.
Check Out Line: Filene’s Basement not low enough
Check out the bankruptcy filed by Filene’s Basement.
The U.S. discount clothing retailer, which was acquired last month by an affiliate of the Buxbaum Group, said it has been hurt by the recession’s severe impact on the fashion retail sector.
Specifically, with everyone else forced to cut prices, Filene’s are no longer low enough to attract customers.
“The retail reaction to the recent economic downturn has narrowed the price differential between department stores and the value retailers and has substantially reduced consumer buying,” the retailer said in an affidavit.
The 100-year-old chain, known for its off-price clothing and annual “running of the brides” wedding gown sales, also filed for bankruptcy once before in 1999, but emerged the following year.
Also in the basket:
Check Out Line: General Growth files for bankruptcy protection
Check out General Growth Properties’ long-anticipated bankruptcy filing. Several retailers have filed for bankruptcy in recent months — now one of their landlords is doing the same. General Growth is the second largest U.S. mall owner, with a portfolio that includes Faneuil Hall marketplace in Boston and Fashion Show in Las Vegas. The company has been guaranteed some debtor-in-possession financing from William Ackman’s Pershing Square Capital Management. The company listed total assets of $29.56 billion and debts of $27.29 billion. Some retailers on its list of creditors include Sephora, which is owed $1.5 million and Borders, which is owed $1.4 million. Unlike some retailers that have been forced to liquidate while in bankruptcy, General Growth said it is seeking to emerge as quickly as possible from bankruptcy with a reorganization that preserves its national business. Also in the basket: Borders to lose directors, scrap reverse split Jarden sees strong Q1; expects to beat view in ’09 Mom seen taking a hit on Mother’s Day Video prank at Domino’s taints brand (N.Y. Times) Fear and greed have sales of guns and ammo shooting up (Wall Street Journal)
(Reuters photo at General Growth’s Glendale Galleria in California)
Check Out Line: Get ready for another going-out-of-business sale
Check out the latest liquidation sale in the retail world.
U.S. regional department store chain Gottschalks will be liquidated after it failed to attract a buyer willing to operate the company as a going concern, the creditors’ committee said. Going-out-of-business sales at the company’s 58 department stores and three specialty apparel stores in six western states are expected to begin around April 3.
A joint venture of liquidators won the auction for the assets of the Fresno, California-based chain, which filed for bankruptcy protection in January. The auction is subject to bankruptcy court approval.
Liquidation sales in the current environment of lower consumer spending are not unusual. In November, Circuit City Stores became the highest-profile retailer to file for bankruptcy during the recession and liquidated its assets after failing to find a buyer.
Also in the basket:
Bennigan’s mulligan
The new owners of Bennigan’s restaurants are hoping to tap into some Irish luck as they relaunch the brand with a Blarney Blast ’09 St. Patrick’s Day party.
The “get your green on” celebration will run through April and highlight the 113-restaurant chain’s new menu and direction.
“It’s a new day at Bennigan’s,” said Vince Runco, chief executive of Bennigan’s Franchising Co. “We’re returning to our roots as a relaxing neighborhood tavern where you can take a break from the daily grind.”
Holding company S&A Restaurant Corp and three dozen other entities, including various Bennigan’s and Steak & Ale affiliates, submitted Chapter 7 bankruptcy petitions in July, seeking to sell assets.
Bennigan’s Franchising Co, owner of the Bennigan’s and Steak & Ale trademarks and franchise agreements, was not part of the Chapter 7 filing.
A group led by Fortress Investment Group bought Bennigan’s Franchising Co and other assets, including the Tavern and Steak & Ale brands, late last year. The new owners have since opened five new restaurants and reopened five formerly closed locations.
Restaurant companies, particularly those in the bar & grill segment where Bennigan’s operates, have faced dim fortunes as diners cut back on spending on meals outside home in the recession.
Check Out Line: Picture this bankruptcy
Check out this development at Ritz Camera Centers. The largest U.S. specialty camera and imaging chain filed for Chapter 11 bankruptcy protection. In some ways, what happened at Ritz is typical of the pressures put on many retailers in this recession. The company said lenders ordered it to boost reserves, which reduced available credit. Also, the recession caused holiday sales to be “materially lower” than a year earlier. But the company was also offering a service fewer and fewer consumers needed: photo processing. With more people using digital cameras and “developing” the pictures on their computers, Ritz was coming under more pressure. “The loss of revenues and profit margins from the diminution in the photo-finishing business proved too much of a burden,” Chief Restructuring Officer Marc Weinsweig said in an affidavit. Also in the basket: Toymaker Lego sees rising 2009 sales Consumer-goods makers heed ‘paycheck cycle’ (WSJ) Campbell Soup profit falls PepsiCo scraps changes to Tropicana (N.Y. Times)
(Photo\Reuters)
Wow! Another buggy-whip dealer goes out of business. This is news?
Check Out Line: Chapter 11, here we come
Check Out the latest bankruptcies.
Gottschalks filed for Chapter 11 bankruptcy protection on Wednesday after a tough holiday season. The company said it would pursue options including the possible sale of the company. For those of you wondering “Got who?” — Gottschalks is a chain with 61 stores, most of them in California. Gottschalks said it had negotiated $125 million in debtor-in-possession financing from a group of lenders led by GE Capital. Gottschalks was not alone. Goody’s LLC, a privately held clothing retailer that emerged from bankruptcy in October, filed for Chapter 11 protection again and said it plans to liquidate its remaining 282 stores. Goody’s said it had investigated a number of alternatives, and ultimately concluded that the best way to maximize value for creditors was to conduct an orderly liquidation.
Gottschalks and Goody’s join KB Toys (shown here), Circuit City and other retailers who have filed for bankruptcy protection recently as consumers cut back on purchases amid the recession. Also in the basket:
Retail sales slump, Commerce Department says
U.S. 2009 auto sales seen at 27-year low
Peanut butter being recalled in Salmonella outbreak
(Reuters photo)
Check Out Line: Circuit City circled by suitors
Check Out Circuit City in deal talks.
The bankrupt electronics chain is negotiating with two undisclosed parties that could either buy the company or provide it with additional financing. The company said the parties are considering providing it with financing to allow it to sustain its operations and restructure through a stand-alone plan, and/or buying the company outright.
Naturally, eyes will turn south toward Ricardo Salinas Pliego. The Mexican retail and media tycoon said in November that he owned 28 percent of Circuit City shares and indicated that he might seek control of the chain, which buckled under the pressure of declining consumer spending and increasing competition by the likes of Wal-Mart and Best Buy. It filed for Chapter 11 bankruptcy protection in November.
Circuit City received a takeover offer from Blockbuster Inc last year, but the movie-rental company later withdrew it and Circuit City was again on its own.
Consumer electronics sales have suffered mightily this year, as a year-long recession has led to consumers to seek out bargains on big-ticket gadgets or forego them altogether. Best Buy, the country’s top specialty electronics chain, narrowed its full-year profit forecast on Friday after posting a 6.5 percent drop in December same-store sales.
And with a government report on Friday showing that U.S. unemployment has hit its highest level in almost 16 years, those TVs, GPS devices and computers are likely to be tough sells for some time.
Also in the basket:
This is business. If Circuit City could not stay competative with other similar businesses, such as Wal-Mart and Best Buy, then they should have prepared for this already. Too often people will put their blinders on and not own up to harsh realities. If they were unwilling to make the changes the market was requiring then they shouldn’t be suprised at the state they are in.
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Resident Shop Talk Expert
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The best part of a Dunkin’ Donut is the hole. They are just like our Government when it comes to taxes, what we pay and what we get for our taxes.