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Tuesday, April 15, 2008

Someday there will be Wal-Mart....Neiman-Marcus...and that's it

Posted by Jill | 6:44 AM

When you set out to systematically destroy the middle class, you also destroy the retailers at which they shop:

Since last fall, eight mostly midsize chains — as diverse as the furniture store Levitz and the electronics seller Sharper Image — have filed for bankruptcy protection as they staggered under mounting debt and declining sales.

But the troubles are quickly spreading to bigger national companies, like Linens ‘n Things, the bedding and furniture retailer with 500 stores in 47 states. It may file for bankruptcy as early as this week, according to people briefed on the matter.

Even retailers that can avoid bankruptcy are shutting down stores to preserve cash through what could be a long economic downturn. Over the next year, Foot Locker said it would close 140 stores, Ann Taylor will start to shutter 117, and the jeweler Zales will close 100.

The surging cost of necessities has led to a national belt-tightening among consumers. Figures released on Monday showed that spending on food and gasoline is crowding out other purchases, leaving people with less to spend on furniture, clothing and electronics. Consequently, chains specializing in those goods are proving vulnerable.

Retailing is a business with big ups and downs during the year, and retailers rely heavily on borrowed money to finance their purchases of merchandise and even to meet payrolls during slow periods. Yet the nation’s banks, struggling with the growing mortgage crisis, have started to balk at extending new loans, effectively cutting up the retail industry’s collective credit cards.

While it's tempting to me to revel in the image of being actually able to drive around Paramus on a Saturday afternoon, the implications of a large number of retailers going out of business are staggering, not the least of which is the elimination of retail as the Job of Last Resort for laid-off workers. After all, there are only so many people that Wal-Mart can hire.

Labels: economic death watch

2 comments

2 Comments:

Melina said...

This smacks of more of the same on a lower level...you know, the CEOs of these companies have made out great and who is gonna suffer are the lower down ones who have been laid off and lost their health insurance.
Im half expecting to find that Halliburton has a liquidator arm...follow the money.
No one expands the way some of these names have, so recklessly, at a time of war and questionable economy. Its not like this house of cards was just built, and for the big bucks that the guys at the top paid themselves you would think that they would have the foresight to see that the economy hasn't been going in the right direction for a long time.
That "growing economy" that Bush boasted for years, with only things like these expansions to back him up, and that every one of these stores seems to offer their own credit card, to my layman's eyes seems like pumping up the stock, taking your profits and then letting the pyramid crumble...and the people on the bottom suffer.
I could be wrong, because, like McCain, I don't know jack shit about the economy...but doesn't it seem like a smaller model of the same?... but when you're a huge financial institution you screw the stock holders and then the government bails you out.

and even as they liquidate sharper image in my mall they have huge signs out front that you can apply for the sharper image credit card...so perhaps part of their reorganization is to lend money for merchandise that they are dumping anyway, and charge huge interest on it...?
This whole thing sorta stinks....

4/15/08, 8:12 AM

Distributorcap said...

this is SOOOOOO bad... the amount of empty stores in manhattan grows every time i walk down a block

barnes and noble closed 2 stores in manhattan

fortunoff declared bankruptcy not too long ago..

and now truckers that ship food and goods are starting to loudly complain about their fuel costs.

one giant circle jerk -- but those CEOs that fund Boehner, McConnell,. Lieberman etc. what pain? what problems?

consumer spending makes up 75% of the GDP --- and more and more of that is going to food and gasoline -- you know those new sneakers for the kid --- sorry..

like melina said -- this sorta stinks, rather this REALLY stinks

4/15/08, 6:36 PM