RETAILERS TAKING STEPS TO AVOID BANKRUPTCY

Sharper Image and Levitz Furniture have declared bankruptcy recently and many more retailers such as Zales, Foot Locker, and Ann Taylor are taking steps to try to avoid it.

From The New York Times:

The consumer spending slump and tightening credit markets are unleashing a widening wave of bankruptcies in American retailing, prompting thousands of store closings that are expected to remake suburban malls and downtown shopping districts across the country.

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.

Whether more chains file for bankruptcy or not, it will be hard to miss the impact of the industry’s troubles in the nation’s malls.

J. C. Penney, Lowe’s and Office Depot are scaling back or delaying expansion. Office Depot had planned to open 150 stores this year; now it will open 75.

The International Council of Shopping Centers, a trade group, estimates there will be 5,770 store closings in 2008, up 25 percent from 2007, when there were 4,603.

Charming Shoppes, which owns the women’s clothing retailers Lane Bryant and Fashion Bug, is closing at least 150 stores. Wilsons the Leather Experts will close 158. And Pacific Sunwear is shutting a 153-store chain called Demo.

BUSINESS NEWS IN BRIEF

NOVEMBER RETAIL SALES UP 1.2% - Reuters

Sales at retailers posted a much stronger-than-expected 1.2 percent rise in November, government data showed on Thursday, as holiday shoppers coped with high energy costs and the fallout from a housing slump.

Excluding autos, retail sales gained 1.8 percent, the Commerce Department said.

ILLINOIS INVESTIGATING COUNTRYWIDE FINANCIAL - The New York Times

The Illinois attorney general is investigating the home loan unit of Countrywide Financial as part of the state’s expanding inquiry into dubious lending practices that have trapped borrowers in high-cost mortgages they can no longer afford.

The inquiry follows an investigation by Ms. Madigan’s office into One Source Mortgage, a Chicago mortgage broker that recently closed its doors. Ms. Madigan sued One Source on Nov. 27, contending that the company misled borrowers by promising low rates on mortgages without advising them that their payments would jump sharply shortly after the loans were made. Countrywide was One Source’s primary lender, according to the lawsuit.

PRODUCER PRICE INDEX JUMPS 3.2% - Reuters

Producer prices surged 3.2 percent in November, the biggest rise in 34 years, on a record rise in gasoline prices, the Labor Department said on Thursday.

Excluding food and energy prices, the producer price index rose an unexpectedly large 0.4 percent, the heftiest gain since February, the report showed. When cars and light trucks also were stripped out, core producer prices rose 0.1 percent.

CONGRESS VOTES TO MOVE RETIREMENT FOR AIRLINE PILOTS TO 65 - USA Today

The Senate approved a measure late Wednesday allowing airline pilots to continue flying past age 60.

Final passage of the bill first approved unanimously on Tuesday by the House answers pleas by older pilots who have lost their pensions because of airline bankruptcies. The bill now awaits President Bush's signature.

STATE INTERESTED IN BUYING WRIGLEY FIELD - Chicago Tribune

City and state officials have had discussions with Cubs executives about possibly selling historic Wrigley Field to a state government entity that currently owns and operates the White Sox's home, U.S. Cellular Field, sources close to the Cubs told the Tribune.

The talks with state and city officials centered on selling the 93-year-old facility to the Illinois Sports Facilities Authority, the government unit the Illinois General Assembly created in 1987 for the purpose of building new Comiskey Park, now U.S. Cellular Field.

RETAIL SALES SHOW SMALL GAIN IN OCTOBER

From AP via MSN:

Retail sales managed a small increase in October as consumers struggled with falling confidence caused by a steep slump in housing and tighter credit conditions.

The Commerce Department reported Wednesday that retail sales edged up 0.2 percent in October, compared to the previous month. It was the weakest showing since a 0.1 percent rise in August and represented a significant slowdown from a 0.7 percent jump in September sales.

ONLINE SALES TRAFFIC INCREASES

The Monday after Thanksgiving, when workers return to their offices and speedy Internet connections, has become a big day for online retailers. Traffic this year was up 19% according to Akamai Technologies, a company that helps other companies send content over the Web. At 1:00 p.m. Central, traffic reached 2,145,558 visitors per minute and was still over 2 million at 8:00 p.m. last night.

The online shopping season has been very good, but some companies were not prepared. Wal-Mart's site was down for at least two hours on Black Friday. Wal-Mart said traffic was up 700% when the servers crashed and the company had only expected a 200% increase. Macy's site was down for an hour the same day, but the company claimed it was due to a bad server, not too much traffic.

USA Today
WSJ.com

WAL-MART GAINS ACCESS TO INDIA THROUGH JOINT VENTURE

Wal-mart has signed a pact with Bharti Enterprises Ltd. to create a 50:50 joint venture aiming to open retail stores in the rapidly growing Indian market. In India, foreign companies are not allowed to open retail stores that stock more than one brand, so Wal-Mart will handle the technology, logistics, and wholesale operation, while Bharti runs the retail stores using a franchisee model. Bharti is exploring the possibility of opening hypermarkets (giant retail stores that sell consumer goods and food), supermarkets, and even smaller stores to gain a piece of the $300 billion Indian retail sector. The goal is to have the first store open in August of 2007.

The Times of India
WSJ.com

TRAFFIC DOWN, SALES UP OVER HOLIDAY SHOPPING WEEKEND

The National Retail Foundation estimates that 140 million shoppers hit stores over the "Black Friday Weekend" this year, 5 million fewer than 2005, but the average shopper spent $360.15, up 18.9% over last year. Here are some interesting stats:

• High-ticket electronics sales were the likely reason for the overall 18.9% spending increase this year. 39.5% of men and 27.5% of women bought consumer electronics or computer-related accessories.
• Men outspent women by 38.1% per shopper.
• 49.2% of the men surveyed purchased books, CDs, DVDs, videos or video games compared to only 34.1% of women.
• The most popular item category purchased was clothing or clothing accessories, and books, CDs, DVDs, videos or video games, with 41.4% of shoppers making a purchase from either category.
• As of Sunday, November 26, the average person has completed 35.6% of their holiday shopping, showing no change from last year.
• Only 8.6% of consumers have finished their holiday shopping.

The NRF estimates that overall holiday sales for 2006 will be up 5% over 2005.

The National Retail Foundation Black Friday Weekend Survey
Reuters
WSJ.com