- Super Bowl XLVI: It's All About the Second Screen
- Could Eli Manning Be A Better Endorser Than Tom Brady?
- Unusual Volume Leaders: Gilead Sciences Spikes
- 10 Stocks JPMorgan Says May Rise Up to 58%
- CEO Blog: The Truth Behind Brand Building
- Will Toyota Rebound to #1 in 2012?
- 5 Small-Cap Growth Stocks With Zero Debt
- The Super Bowl's Big Advertising Winners: Super Sunday Ad Tracker
- Steinbock: Exporting an Inflation Tsunami
- Unemployment Rate Hinges On Much More Than Hiring
- Jobs Growth Raises Questions About Economy and Fed
- Jobs Report Spurs Market Rally—But Is the Worst Over?
- Art Cashin: 'People Have Started Hiring'
- Mitt Romney Expected to Easily Win Nevada: Poll
- Big Political Donors — and What They Want
- Could Eli Manning Be a Better Endorser Than Tom Brady?
- 10 High-Priced Super Bowl Rings
- Super Bowl XLVI: It's All About the Second Screen
MOST SHARED
- Santelli: Here's What's Wrong With the Jobs Number
- Dow Rallies to Pre-Recession Levels: McDonald's Leads Since May 2008
- Micron Technology CEO Dies in Plane Crash
- The 'Fragile Consumer' Is Feeling Better: Clorox CEO
- The Week Ahead: Slew of Economic Data
- Lightning Round: Kraft Foods, SunOpta, NVIDIA and More
- What Cramer's Watching Next Week
- Bill Gurley Bullish On Facebook, Social Media Firms
- How to Play Facebook Before the IPO
- Weyerhaeuser CEO on Earnings
ABOUT THIS BLOG
|
This blog will look at the winners and losers in the retail space. Who has the right strategy to capture consumer dollars? It also will look for trends in consumer spending and how that will impact the economy.
Text Size 
Sorry, Santa, We're Closed.
This holiday season is make or break for some retailers, and while it’s not even Halloween yet, we’re already seeing some of them break.
 |
"It’s a combination of the credit crisis and the consumer being in the worst condition in 100 years," says Howard Davidowitz, chairman of Davidowitz & Associates, a retail-consulting and investment-banking firm.
"It’s a debacle!" he exclaims.
West Coast department store Mervyns, which filed for bankruptcy protection in July, announced last week that, after 60 years, it would be shutting its doors for good after this holiday season. That followed on the heels of Linens n’ Things, which filed for bankruptcy in the spring, only to back away from its restructuring plans last week and begin liquidating its stores.
"The worst is yet to come" for the economy — and therefore consumers and retailers — Davidowitz says, but we probably won’t see any more stores going out of business before the holidays.
The reason we’ve seen any bankruptcies this early, Davidowitz says, is simple: Credit.
"Once your credit gets cut off, you can’t get any Christmas goods," Davidowitz says. That’s what happened to Mervyn’s and Linens ‘n Things.
Among other stores that have filed for bankruptcy protection recently are: Sharper Image, Shoe Pavilion and Steve & Barry's.
And struggling electronics retailer Circuit City [CC
Loading...
()
] is considering closing 20 percent of its stores and cutting thousands of jobs in order to avoid a bankruptcy filing, according to the Wall Street Journal.
"There are so many retail companies on the edge without a lot of credit" but most will hang on until after Christmas, Davidowitz says. But you can bet that "banks will keep them on a short string until after the holiday," he says.
Some retail categories are at more risk than others, including home retailers and department stores. "They can’t offer consumers value," Davidowitz says. And, for obvious reasons, "Luxury isn’t so wonderful," he says.
Retailers are going to have another couple of years of very bad results, according to Davidowitz's projections.
"The worst is yet to come," he says. "Massive closings. Massive number of bankruptcies."
Still, despite all the gloom and doom, there are a lot of winners in the retail circle, including Wal-Mart [WMT
Loading...
()
], BJs Wholesale [BJ
Loading...
()
], Costco [COST
Loading...
()
]and dollar stores.
And the big winner is ... Bed, Bath & Beyond [BBBY
Loading...
()
]!
Not only is their chief rival going out of business, but "they're the gold standard of the sector," Davidowitz says.
Recent Holiday-Central Posts:
- In Tough Times, Men Go Shopping
- Will Tough Times Lead to Good Electronics Deals?
- Reader Mail: Being Thrifty Is Nifty
- Sticking to the 'Bear' Essentials
- A Blue, Blue Christmas for Retailers
- Halloween May Be a Treat for Retailers
- Fantasy Gift: Immortalized in Lego
Questions? Comments?
- Beyond stocks and bonds.
- Next year, Facebooks’ Mark Zuckerberg will get paid just one dollar in salary. Will he ever pay taxes again?
- Here's who owns the most. Foreign countries listed include private and public investors, according to monthly US Treasury data.
- Even before Bryan Batt hit it big on ‘Mad Men,’ he developed a second career in retail.
- The town of Hoboken says no to a spin-off of “Jersey Shore” after a debate among local business owners.
- It’s hard to top these.
Data is a real-time snapshot *Data is delayed at least 15 minutes
