Retail Bankruptcies On The Rise

A Growing Number Of Companies Are Feeling The Crunch From Cash-Strapped Consumers

(AP)  A weak holiday season and a struggling economy led retailers Sharper Image Corp. and Lillian Vernon Corp. to file for bankruptcy this week, and analysts predict others could soon follow them as consumer spending worsens.

"You'll see a record number of bankruptcies over the next 50, 100, and 1,000 days," said Burt P. Flickinger III, managing director of the New York-based retail consulting firm Strategic Resource Group. "Consumers are cash- and credit-constrained. They're out of purchasing power."

Both Sharper Image, known for its high-tech novelty gadgets, and Lillian Vernon, which sells low-cost gifts and gadgets through its catalog and Web site, have long been plagued with falling sales.

But retailers across the sector have been laying off staff and closing stores as consumers cut back on discretionary spending, faced with weak credit and housing markets and high food and gas prices.

The International Council of Shopping Centers projects 2008 store closings could reach 5,770 stores in the U.S. in 2008, the largest number of closings since 2004.

Even Wal-Mart Stores Inc., the world's largest retailer, reported sales in stores open at least one year rose just 0.5 percent in January, missing analyst expectations. Retailers as a whole reported their worst January same-store sales in almost four decades.

Flickinger said the problem is partly food and fuel inflation. While consumers used to pay 10 cents of every dollar for food and fuel, they now pay up to 20 cents per dollar.

"Companies are contracting and collapsing," he said. "You'll see it in food and drug, discount and department stores, as well as specialty stores and dollar stores. Every major form of retailing."

In an affidavit filed with the U.S. Bankruptcy Court for the District of Delaware on Tuesday, Sharper Image Chief Financial Officer Rebecca L. Roedell said the company has experienced declining sales since 2004 and recorded net losses in fiscal 2005 to 2007, continuing into 2008.

She said the company is in a "severe liquidity crisis," hurt by tougher competition, deteriorating gross margins, pending litigation and the volatile credit and financing markets, among other factors.

San Francisco-based Sharper Image plans to close 90 of its 184 stores as soon as possible after it sells their inventories. It plans to continue to conduct business as usual while it develops a reorganization plan.

Meanwhile, Lillian Vernon Chief Financial Officer Robert J. Eveleigh said in an affidavit Wednesday that the company, which has a highly cyclical business that peaks during the Christmas holidays, has experienced declining sales and rising costs over the past decade.

"During the past holiday season expected sales growth did not occur, which resulted in lower profitability and significant unsold inventory," Eveleigh wrote. "These factors combined to significantly impair (Lillian Vernon's) ability to find additional financing."

The company is evaluating whether it is in the best interest of its shareholders to sell itself or liquidate.

Both companies had recently attempted management changes and other moves to try and help results. Last week, Sharper Image named a crisis-management expert as its new chief executive, while Lillian Vernon laid off half its year-round work force.

Soleil Securities Group Inc. analyst Scott Tilghman said in a note to investors on Wednesday that Sharper Image's filing was not a surprise, and he discontinued coverage. "We find no reason for investors to be involved with Sharper Image in the near term," he wrote.

Sharper Image shares lost $1.05, or 72.9 percent, to 39 cents, and hit an all-time low of 29 cents at one point during the day.

---

Some other retailers that have filed bankruptcy over the past several months:

• Canton, Massachusetts-based electronics retailer Tweeter Home Entertainment Group filed bankruptcy last June. It was acquired by Schultze Asset Management LLC, which continues to operate the company.
  
  
• Fort Worth, Texas-based home furnishings retailer The Bombay Co. declared bankruptcy in September, and shuttered the last of its stores in January.
  
  
• New York-based Levitz Furniture filed for bankruptcy in November. The company has since been liquidating its inventory.
  
  
• Lyndhurst, New Jersey-based Harvey Electronics Inc., a high-end audio-video retailer, filed for bankruptcy protection in December.
  
  
• Wickes Furniture Co., a Wheeling, Illinois-based company owned by private investment firm Sun Capital Partners Inc., filed for bankruptcy earlier this month.
  
  
• Jewelry and home furnishings retailer Fortunoff, based in Uniondale, New York, agreed this month to sell its business to NRDC Equity Partners LLC, which owns the Lord & Taylor department store chain, through a bankruptcy process.

[antoniof123]

The last honest President was a failure.

Goes to prove a point if you are honest don''t run for President you will be hated because you tell the truth.

[gce65]

Wish I as an individual could get the same kind of bankruptcy protection these companies will. But banks rewrote the bankruptcy laws themselves thanks to the last GOP Congress; now we''re all at their (lack of) mercy.

[rreed87139]

Business majors, PHd''s, Masters degrees in finance, and for some strange reason these geniuses can figure out if you borrow at 1% a year with the chance of it changing to 22.9% in a year or two that banks are going to figure out how to make that change for you.
Apparently everyones not honest like Americas heroes Bill Clinton, Obama, Hillary, and McCain.
Criminals putting criminals out of business. Nothing more. If your too stupid or greedy to understand or care about the initial risk you should be out of business and/or lose your home. Period.
Because this corporate and individual welfare and the taxes /fees associated with it will soon cause legitimate owners to lose what they have because of the costs that will be imposed upon them in the form of taxes and fees.

[rreed87139]

If we are going to allow corporate welfare then the management involved in the failure must immediately be removed without severance and be replaced. You can measure any companies management as poor when they start removing benfits. This is called a demotion or paycut and indicates the company is no longer fiscally worth a ***. It ruly shows the integrity and worth of the management when they show they are not willing to make the same sacrafices they are imposing on the rest of the company.

[walt1944-2009]

The Great Emperor Bush II is upset that businesses are beginning to feel the effects of the "non-recession" by going bankrupt.

The Great Emperor''s plan, after all, was to cut taxes for business, make business "exempt" from answering to labor laws, and reduce competition through growing monopolies, so that business could achieve the greatest profits possible. Allowing businesses to outsource jobs, and charge whatever they want, "gouging" the consumer for every consumable imaginable was also allowed to achieve this end.

The possibility that the spending habits of the middle class might be driving the economy, never entered into the Great Emperor Bush''s reasoning, since it did not follow the models of "Ferengi" economics and "Reganonmics" which the neocon Fascist Nazi GOP holds as GOSPEL!!! Such ideas as a financially healthy middle class were too "liberal" for the neocon Fascist Nazis who argued that such concepts were "DEAD"!

Now we have an economic nightmare on our hands which the new occupant of the White House will have to address, provided he/she knows something about economics!

SIG HEIL, BUSH!!!!
sig heil, McCain????

[anonbene]

all those trickle down tax cuts for the rich and corporate so they would create more jobs really is paying off isn''t it? As he fell past the tenth floor window I heard him say, so far so good. When voting think, "MORE OF THE SAME MCCAIN"

[patriotic9]

Oil is the back bone of our economy.

Why shouldn''t we help Arabs in the destruction of Israel on the Palestinian map, far away from the concentration camps in Germany, to enjoy Oil in cheaper prices?

Why should we protect HOLY LAND "Israel" and GOD-CHOSEN NON-AMERICANS to buy HATRED, TERRORISM and 9/11 against UNHOLY LAND "UNITED STATES" and GOD-NEGLECTED AMERICANS?

Because CHRISTIANITY is PSYCHOSIS and CHRISTIANS are PSYCHOTICS!!!!

[sjw1253]

I have been surprised that the two major companies mentioned in this article have survived as long as they have.

I love both of them - and I have seen S.I.''s prices go down over the past few years - but they still tend to sell pretty hefty priced items that can be obtained by other companies with different technologies for a lot less.

I am sad to see they are closing half of their stores and hope they can re-evaluate their strategies to make themself successful again.

I am sure that another company will take over Lillian Vernon''s items - they are clearly novelty and the supply/demand/opportunity costs will run the business of all of the items that will continue to be sellable.

[hypnotoad72]

I was overhearing a meeting at walmart, held in the middle of the electronics aisle. Mgmt was cheering the workers at how sales had gone up xx% and in one case yyy%.

I should have asked how much that would reflect the workers'' pay, but the looks on their faces spoke volumes. :(

[jwind11]

The Reich Wing Ruling Elite destroyed the Middle Class, the very engine that propelled our entire economy. I hope they all lose every dime they have, and jump from very tall buildings in despair.
Car lots full of cars no one can afford to buy, Housing Developments full of Houses no one can afford to buy, stores full of merchandise, no one can afford to buy, but you''''ll be getting a $600 dollar check soon, that should fix everything,.........idiots....

Posted by veteran71

do you really hope that?

[arthurcl1]

Yes, I said it all last year that Emperor Bush would be bringing this country down to it''s knees and now it''s happening in his last year. Our Economy is destroyed thanks to his rule! He and Cheney should be tried for thier War Crimes and Banks rewrote the bankruptcy laws themselves thanks to GOP and Bush! Now what''s next? Bush is an idiot!

[joyous88]

mission accomplished, the surge is working,

heck of a job bushie;


Some people still support these idiots?

[joyous88]

walt1944 = Right On!

conservatives are closet fascists

and un-american

[nothappyatall]

Thanks to the Bush regime, he signed the bill making it EASIER for companies to file bankruptcy and harder for everyone else.

[alphaa10-2009]

The CBS article notes a "retail crunch", symptomized by commercial bankruptcies. But this event may turn out only the first of a massive series of aftershocks from the housing scam.

Note the word "scam"-- already investigators pursue the notion instability in asset valuation by some of the biggest Wall Street players is a product of criminal greed-- ie. fraud by banks supposed "too large to fail".

But Fed Chairman Bernanke will suffer nobody to spoil the Wall Street party, or cast blame where it belongs. Instead, Bernanke is fully occupied whispering "taxpayer bailout" to congress, even as he makes soothing public statements for damage control.

Taxpayers are still paying for the billion-ddollar Silverado scandal of the 1990''s under Neil Bush! Taxpayer bailout is not a remedy pleasing to anybody but the well-off culprits for this huge financial disaster.

[alphaa10-2009]

Here is interesting detail about your "investment" in Neil Bush''s $1 billion mistake.

http://www.allbusiness.com/personal-finance/real-estate-mortgage-loans/282011-1.html

And to think George Bush, Jr. has doubled the national debt in six years! Clearly, a horrendous talent for creating financial debacles runs in the Bush family...

Will we be able to afford the interest after the Bush brothers are finished with America?

joyous88 you need to lay off the joyjuice...

McCain & Rice - learn to live with it!

[mcvet]

McCain & Rice - learn to live with it!


--------------------------------------------------------------------------------

Posted by KEITHGARDNER at 10:00 PM : Feb 20, 2008
+ report abuse

BAAAAAAAAAAAAAAAHAHAHAHA good one! Do you have any more? I mean man that''s funny!!

[mcvet]

do you really hope that?


--------------------------------------------------------------------------------

Posted by jwind11 at 07:17 PM : Feb 20, 2008
+ report abuse

You see a problem with Nazi Scum that have distroyed the very soul and spirit of this nation splattering the sidewalk? Personally I think that''s to good for that greedy slime. Me? I''d like to see public hanging of all the "Trickle Down" frauds! Sieg Heil Bush!

[pollroller1]

Well, the other side of the coin is that people want instant gratification. They charge stuff that they can''t afford. We are bombarded with TV adds 24 hours a day trying to sell us stuff that we don''t really need.
And the credit cards get used to their limit to pay for this stuff.

[rowdytexan2]

I''d sure like to see some of these guys living on $35,000 a year. ROFL

[brianbwb-2009]

"McCain & Rice - learn to live with it!" Posted by KEITHGARDNER

More accurately, learn to die with it.

[jerkeedoodle]

Awww,too bad.poor little rich bozos can''t make ends meet,because we can''t make ends meet.I LOVE IT!WE NEED MORE OF IT!VOTE FOR McCAIN,MORONS!

[king77shaw]

if you don''t like multi-national corporations, STOP SUPPORTING THEM !

1) CANCEL YOUR CABLE / SATTELITE TV: let the corporate media moguls (and their advertisers) know that you will no longer pay for their propaganda.

2) STOP INVESTING YOUR MONEY ON WALL ("WAR") STREET: corporate America is selling out the middle class to the lowest global bidder and using our own money to do it; the financial markets will push for anything that increases profits - especially war .. invest your money in land, real estate, gold and silver.

3) SUPPORT LOCAL ECONOMIES !
- Buy from local manufacturers, local retailers, local craftspeople/artisans, etc.
- if possible, BURN WOOD for heat;
- support local growers or grow some of your own food;
- implement alternative energy sources (solar, hybrid autos etc ..)
- develop local means of commerce not based on the failing US dollar.

4) AFFORDABLE HEALTH CARE BEGINS WITH YOU - healthy eating habits and exercise will create less demand on the system meaning lower costs. You%u2019ll have plenty of time to work out once you UNPLUG THE TV DRUG.

5) STOP UNNECESSARY CONSUMPTION & STOP USING YOUR CREDIT CARD !

6) DECENTRALIZE ! - the global economy is nothing more than a ploy to centralize power, control and wealth into the hands of an elite few - blinded by misinformation, the American people are buying right into it - the rich get richer and the middle class is quickly becoming the working poor.

[king77shaw]

if you don''t like multi-national corporations, STOP SUPPORTING THEM !

1) CANCEL YOUR CABLE / SATTELITE TV: let the corporate media moguls (and their advertisers) know that you will no longer pay for their propaganda.

2) STOP INVESTING YOUR MONEY ON WALL ("WAR") STREET: corporate America is selling out the middle class to the lowest global bidder and using our own money to do it; the financial markets will push for anything that increases profits - especially war .. invest your money in land, real estate, gold and silver.

3) SUPPORT LOCAL ECONOMIES !
- Buy from local manufacturers, local retailers, local craftspeople/artisans, etc.
- if possible, BURN WOOD for heat;
- support local growers or grow some of your own food;
- implement alternative energy sources (solar, hybrid autos etc ..)
- develop local means of commerce not based on the failing US dollar.

4) AFFORDABLE HEALTH CARE BEGINS WITH YOU - healthy eating habits and exercise will create less demand on the system meaning lower costs. You%u2019ll have plenty of time to work out once you UNPLUG THE TV DRUG.

5) STOP UNNECESSARY CONSUMPTION & STOP USING YOUR CREDIT CARD !

6) DECENTRALIZE ! - the global economy is nothing more than a ploy to centralize power, control and wealth into the hands of an elite few - blinded by misinformation, the American people are buying right into it - the rich get richer and the middle class is quickly becoming the working poor.

[incog-nito]

People still don''t get it. This is not a recession. It''s a race to the bottom: 1) Companies outsource jobs to other countries to cut costs, and this drives wages down and unemployment up. 2) Lowered wages force people to look for cheaper goods which are of course made overseas, creating more demand for outsourcing. And 3) See 1.

This is going to continue for a long, long time.

[jerkeedoodle]

Hear ya'' King,Already there,at least as much as possible.Think i''ll leave the real estate alone,they''ll come and take it someday,and i don''t want to be tied to something that''ll make me think twice if I have to move fast.I''ve already sold my house.Guns might be the best investment.

[jerkeedoodle]

incog-nito,vicious circle,sweetie.there is no bottom.

[alphaa10-2009]

Stop Supporting Them--2
5) STOP UNNECESSARY CONSUMPTION & STOP USING YOUR CREDIT CARD !

6) DECENTRALIZE ! - the global economy is nothing more than a ploy to centralize power, control and wealth into the hands of an elite few - blinded by misinformation, the American people are buying right into it - the rich get richer and the middle class is quickly becoming the working poor."

---

Excellent points-- measures like these shake corporate America to its roots. But since burning wood may not be very practical or environmentally responsible if all of us did it, look into the viable solar-electric market-- solar panels reduce electric bills drastically. Your roof becomes a net power generator during the day, collecting a credit toward non-solar gain conditions (night, clouds). That solution only saves money, in the long run, and state after state is adopting the new two-way metering system..

[alphaa10-2009]

king77shaw said, "if you don''''t like multi-national corporations, STOP SUPPORTING THEM !

1) CANCEL YOUR CABLE / SATTELITE TV: let the corporate media and advertisers know your won''t pay for their propaganda.

2) STOP INVESTING YOUR MONEY ON WALL ("WAR") STREET: corporate America is selling out the middle class to the lowest global bidder and using our own money to do it; the financial markets will push for anything that increases profits - especially war .. invest your money in land, real estate, gold and silver.

3) SUPPORT LOCAL ECONOMIES !
- Buy from local manufacturers, retailers, craftspeople/artisans, etc.
- if possible, BURN WOOD for heat;
- support local growers or grow some of your own food;
- implement alternative energy sources (solar, hybrid autos etc ..)
- develop local means of commerce not based on the failing US dollar.

4) AFFORDABLE HEALTH CARE BEGINS WITH YOU - healthy eating habits and exercise create less demand on the healthcare system,lowering costs. You%u2019ll have plenty of time to work out when you UNPLUG THE TV DRUG.
(See Stop Supporting Them--2)

[jjp735i]

Any one suprised?

People have been screaming for the past few years that things were getting tougher. As always, those screams fell on deaf ears.

[cfin5]

The last business to leave "Calinaffordia" has to turn off the lights. Liberal Governor "economic gurlyman" Schwarzenegger has taxed you out dudes. California''s a bad place to do business so head on over to the mid-west!

[noloyalisti]

Schwarzenneger is a right wing GOP tool. Calling him liberal is like calling the fake war hero McCain a liberal. It is almost too ignorant to even consider.

The governator has been a huge Bush supporter. He was in NYC when we were protesting the Grand Oil Party (or is it the Greasy Old Perverts) convention in ''04. He is in favor of privatizing like the rest of the GOP crime family to transfer wealth from the poor to the rich.

Besides the midwest is like hell. The road to hell is paved with Republicans. Even the Dems there support the Government of Pigs for endless war, privatization, corporate control of our rights, etc.