Reuters reports that some retail financial experts expect there are many more retail bankuptcies still to come. Some stores have had several straight months of falling sales and they won't be able to survive if this continues.
"I expect that the numbers of bankruptcies are going to increase throughout the year as retailers now have to start spending money to increase inventory for Back-to-School and the Christmas season and they don't have the necessary funds," said Matthew Bordwin, managing director at KPMG Corporate Finance, who works with troubled retailers.
"I think you would expect to see more in the third quarter and fourth quarter and definitely following Christmas," Bordwin said. He said he was surprised there were only a handful of retail bankruptcies so far in 2009, as consumers have not been much more willing to open their wallets.
"The auto stores, the dollar stores and off-price merchandise seem to be the only categories that are holding their own," Bordwin said. "It looks like everybody else's same store sales continue to decline, and there's only so long that can go on."
The article mentions retailers are going to soon have to start stocking up on merchandise for the holidays. They will have to stock up but they are likely to avoid over buying. There may not be as many items in stock and this could make it harder to find items this holiday season.
Earnings season continues in the retail industry. Here are some highlights of some of the latest retailers' earnings reports and future sales estimates. Some of the retailers in this round of earning reports put up positive numbers, which is good to see.
Hot Topic has been faring well despite the recession. Hot Topic's same-store sales were up over 5% in the 4th quarter. Hot Topic has Twilightto thank for its postive sales numbers.
Net-a-Porter reported sales up by 50% for its fiscal year ending January, 2009.
Michaels Stores performed very well with 4th quarter net income up 40%. The company's core arts-and-crafts business had positive sales while sales of its home decor and seasonal products fell. Crafts were expected to be somewhat recession proof.
Profits plunged 27% and sales were flat for UK retailer John Lewis.
Kroger's sale and net-profits were up thanks largely to the company's private-label Kroger brand products.
Bon-Ton is forecasting sales at its store to fall in 2009. Sales for the company fell 9.7% in the fourth quarter of 2008.
Dick's Sporting Goods reported an 8.6% drop in same-store sales and they are forecasting a similar 9% to 12% drop for the first quarter.
American Eagle's profit was down in the fourth quarter. The company's same-store sales for Q4 were also down slightly.
Staples 4th quarter profits fell 14%. Staples chose not to provide first quarter or 2009 estimates. They expect "weak economic climate to continue throughout the year."
Queuing Psychology Can Help Make Long Lines a Little Less Unpleasant
CNN has an interesting article about queue psychology. It says experts in the field of queuing psychology and industrial engineers work for large theme parks like Disney's parks to make lines seem shorter for visitors.
The line to one popular attraction at Epcot features cameras and large interactive screens that allow visitors to see themselves and play games, such as trying to burst virtual water balloons to reveal a hidden image, Garlington said.
People waiting in line for a comedy show at Walt Disney World are asked to text message jokes that may be used during the main event.
"It works as our warm-up act essentially for the show, but it also takes time while people are working through that and so it keeps them entertained while they're waiting," Garlington said.
"We do study the psychology, try to understand what our guests are thinking and make sure that we're keeping them happy as they move through the lines."
Disney employs more than 75 industrial engineers who help the company with queue management at its parks around the world, said Marilyn Waters, director of media relations at Walt Disney Imagineering.
Encouraging interactive text messaging and expensive interactive screens help at Disney's parks but retailers don't put much if any resources toward entertaining people while they wait in lines. Retailers can do simple things like give an estimate of how long it may take to get through a line or to get into a store. Even a little bit of information can help people waiting according to queue psychology. Retailers can also have things like faster moving lanes for people with just a few items like you see at grocery stores.
What retailers will be focusing on this holiday weekend is trying to get people through the lines as quickly as possible so they can sell as many products as possible. You will probably have to entertain yourself if you get caught in a slow holiday shopping line. That's another good reason to shop with a friend on Black Friday or at least have a friend you can text with while you are stuck outside waiting to get into a store or stuck in line waiting to pay for your Black Friday finds.
Harold's Files For Bankruptcy; Will Hold Liquidation Sales
Retailer Daily reports that Harold's - a Dallas-based upscale clothing retailer - is joining the growing list of retailers that are closing up shop.
Apparel retailer Harold's filed its bankruptcy claim in a US court in Oklahoma, citing increased competition and a weak economy. Assets and liabilities were listed in the range of $10-50 million, reports the Houston Chronicle.
Harold's had considered strategic alternatives but didn't receive any interest in a going-concern sale, just four bids for the liquidation of its merchandise, Reuters writes.
Dallas-based Harold's will liquidate all merchandise in its 43 stores among 18 states. Some 65 employees have already been laid off from corporate and administrative positions. Harold's employs 559 workers, about half of which work part time.
A Reuters article (hat tip Wallet Pop) about the closing says Harold's will hold going-out-of business sales at 43 stores.
Bankrupt apparel retailer Harold's Stores Inc HRLS.PK will close all its 43 stores after a bankruptcy court approved plans for the chain to begin going-out-of business sales, liquidation adviser Gordon Brothers Group said on Tuesday.
Harold's has stores in 18 states. You can find a list of Harold's store here if you are interested in checking out the closing sales.
Talbots, Inc. wants to sell its J. Jill line of apparel, shoes and accessories. DealBook reports that Talbots acquired J. Jill two years ago and outbid Liz Claiborne for the women's clothing brand.
Most everyone has purchased an expensive fashion item, only to discard it a few seasons later. That seems to be what happened with Talbots, the women's clothing chain. It said Thursday it would seek to sell its J. Jill unit just two years after buying it for $518 million in cash.
To win J. Jill, Talbots had to top a competing offer from Liz Claiborne, another purveyor of high-end women’s apparel. It ended up paying $24.05 a share, far above the $18 a share, or $366 million, that Liz Claiborne had offered a few months earlier.
To help pay for the deal, Talbots took out a $400 million loan facility, regulatory filings show.
The purchase price may have been too high and Talbots has been dissapointed with J. Jill's sales. The Boston Globereports that if no buyer is found J. Jill could be closed.
Retail analysts say it will be difficult in this environ ment for Talbots to find a buyer willing to purchase a struggling retail chain - and one with enough cash to finance the deal in these tight credit markets. Some observers suggested holding companies, such as VF Corp. or Kellwood Co., might be interested in J. Jill, though it remains a tough sell. VF, which owns brands such as Nautica and Lee, and Kellwood, which runs Sag Harbor and Calvin Klein brands, did not return messages seeking comment. If no buyer comes forward, J. Jill, with about 3,800 employees and 282 shops, could be closed.
The Boston Globe also says that Talbots chief executive Trudy F. Sullivan is confident they will be able to find J. Jill a new home.
Value City Files for Bankruptcy; May Close Remaining Stores
WWD reports that discount retailer Value City is planning to liquidate following a Chapter 11 filing. Value City has 66 stores still open after closing 75 stores in the past ten months.
Value City Department Stores plans to liquidate following the filing of a voluntary Chapter 11 petition in a Manhattan bankruptcy court over the weekend.
After shutting more than 75 stores since December, Value City has 66 units in the Midwest, mid-Atlantic and Southern U.S. The filing estimates both assets and liabilities of between $100 million and $500 million.
According to an affidavit filed by Stephen Darr, chief financial and accounting officer of the Columbus, Ohio-based retailer, for the seven months ended Aug. 31, the retailer posted sales of $288.5 million and incurred losses of $70 million.
Bizjournals.com reports that spokeswoman Kristin Mack said decisions on store closings will be made over the next few weeks. The company employs 4,500 people. This is the latest in a string of store closing announcements that includes Mervyns, Linens-N-Thing and Circuit City.
Producers Downsizing Products While Keeping the Price the Same
CBS reports on a disturbing product trend. The producers of many products have reduced the size of their products while keeping the price the same. In other words, consumers are getting less product for the same price. Some of the brands shown to be downsizing products in the video below include Hellman's, Breyers and Kellogg's. The producers blame the downsizing on the economy. A few articles about the downsizing trend can be found at Consumer Reports, NBC and the Chicago Tribune. The Consumerist blog also has an informative section called the Grocery Shrink Ray.
Macy's is closing
nine of its stores and is laying off 900 people. Note: See update below.
Department-store operator Macy's Inc. on Friday said it will shutter nine underperforming stores, which collectively employ nearly 900 staffers, the latest indication of a weak retail environment.
The department stores are in Indiana, Louisiana, Ohio, Oklahoma, Texas and Utah and were all acquired when Macy's bought department-store operator May Co. in 2005.
Macy's integration of May Co. department stores has been bumpy. The company has faced disappointing sales and resistance from shoppers in some markets where the Macy's name replaced local favorites it absorbed as part of the May acquisition.
Further, a weak housing market, persistent credit problems and high food and gasoline prices are curbing U.S. consumers' discretionary spending.
"While the decision to close stores is difficult, it is necessary that we do so selectively in locations with declining sales and where we have been unable to identify sufficient growth opportunities," said Terry J. Lundgren, company chairman, president and chief executive.
Over the next several weeks, the stores that are set to close will be having big clearance sales, so keep an eye out in your local paper if you're in one of these cities: Houston, Indianapolis, Oklahoma City, Lake Charles, La.; Akron, Ohio; Canton, Ohio; North Randall, Ohio or Riverdale, Utah.
Update 1-8-08: Macy's is now closing 11 stores. Here's a list of the eleven stores Macy's is closing.
Update 2-2-09: Macy's has announced 7,000 layoffs.
Retailer Daily 
Talbots, Inc. wants to sell its 
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