Struggles grow for retailers

[flashl]

Economy's slide sends more stores into bankruptcy

... Wickes Furniture Co. and Bombay Co. have gone out of business. Levitz Furniture is liquidating. Sharper Image Corp. and Lillian Vernon Corp. filed for bankruptcy protection from creditors. And now Linens 'n Things Inc. is said to be facing Chapter 11 bankruptcy as early as next week.

...

Since January, S&P, the New York-based credit rating agency, lowered ratings on 14 of the retail companies it monitors and upgraded only two. Among the "weakest" retailers—those that Standard & Poor's has given its lowest credit ratings to—are Loehmann's Holdings Inc., Duane Reade Inc., Eddie Bauer Holdings Inc., BCBG Max Azria Group Inc. and Blockbuster Inc. Hirschberg said these firms, which Standard & Poor's calls "highly leveraged," are more vulnerable when the economy sours.

'March Badness'

Gimme Credit bond analyst Carol Levenson termed the dour March retail sales performance as "March Badness," noting that sales declines at stores open at least a year were among the biggest drops in six years: down 18 percent at Gap Inc., down 12.3 percent at Penneys, down 15.5 percent at Kohl's.

...

Linens 'n Things, which has seen its sales fall and its bonds plummet, has hired restructuring firm Conway Del Genio Gries & Co. to weigh options that include bankruptcy, people with knowledge of the agreement said, according to Bloomberg News. The chain is trying to negotiate with creditors including General Electric Co., said the people, who declined to be named because the discussions are private. The Wall Street Journal reported that Linens 'n Things may file for Chapter 11 bankruptcy protection by Tuesday.

...

Wal-Mart Stores Inc. and Costco Wholesale Corp. are faring better, partly because they have big grocery businesses that keep people coming into their stores. Both retailers posted slight sales gains for March.

Chicago Tribune

Now that the fictitious "consumer spending = 2/3 of economy model" is no longer sustainable, one has to wonder, what form the "new" economy will take with no consumer discretionary spending?

[thunder rising]

1. That's what happens when you sell out the middle class. Fuck them

[TheCowsCameHome]

2. Suddenly "sell out" has a new meaning

and not your typical 20% off sale...............

[Warpy]

3. I predicted this last summer

when the funny assets started to collapse. Banks just aren't going to be as generous when it comes to extending cheap credit and those teaser rates on credit cards and second mortgages are now a thing of the past.

Absent cheap and easy credit, people are being stuck with their inadequate paychecks, and that means hunkering down and buying nothing new but food and maybe shoes for the kids. Everything else is coming from yard sales, if there's money for everything else after the debt they already have gets serviced.

Expect a lot more than this to go belly up in the next couple of years.