Retail Implosion: Steve & Barry's Bankruptcy

Steve and Barry's just can't find its way out of bankruptcy and has declared for bankruptcy again and announced liquidation of all its stores.

Around the pike are 5,000 layoffs, which is its employment count, and some woes for commercial real estate owners of properties they will vacate. Its been a while since we wrote about store closings and the impact on the commercial properties owners, but I expect to accelerate stories like that into the new year after the clownsumer holiday period.

Steve and Barry's is based in Port Washington, New York.

Related:
Rumor: Circuit City to close 150 stores within 60 days
Retail Closure and Unemployment
Kumar Would Be Upset: Harold's Files Bankruptcy
Consumer Spending Drops Most In 28 Years

Crippled Industry: Imperial Casino Hotel Filed Bankruptcy

Imperial Casino Hotel located in a place called Cripple Creek, Colorado has filed for bankruptcy.

If you've followed along this blog you will note the lack of surprise that a business that depends on hotel stays, people throwing away money, and located out of the way would file for bankruptcy or perform a layoff. Casino styled companies typically belong in the strife index, but this index has not been avoiding the economic wave well.

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Holes in the Vice Index = Strife?

Bankruptcy Numbers Are In

In a stark reminder of the mountain of poor decisions the average American clownsumer has buried themself under, personal bankruptcy numbers have been released, and it ain't pretty.

Culminating two straight years of increases in bankruptcy filings, these are the latest numbers:

• Filings are up 8% from October to September this year.
• Filings are up nearly 34% YoY.
• This is the first time there has been more than 100,000 bankruptcy filings (there were 108,595) in a single month since 2005 when a new law made it more difficult and more expensive to file.
• When compared to filers in 2001, people who filed for bankruptcy protection in 2007 had on average 21% more secured debt and 44% more unsecured debt, but their income had remained flat.
• Places where real estate speculation ran particularly rampant were hit the hardest: YoY, California had 80% more filings, Nevada 70% and Florida 62%.

Related:
Bankrupt: Coming Soon to Someone You Know, Crisis of Consumer Confidence

Caught Off Guard: LaGarde Files Bankruptcy

LaGarde, a software shop, has filed bankruptcy and removed nearly 40% of their employees via layoff. This brings them down to 27 employees from 47.

The company also serves as a good example to show how it is not only banks that have to absorb the impact and write down of their 'assett', but this company left some employees unpaid. There's some lost buying power for feeding the holiday sales machine.

LaGarde is headquartered in Olathe, Missouri.

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Out of a Jobster: Jobster Cuts to Barebones
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Kumar Would Be Upset: Harold's Files Bankruptcy

Harold's, a clothing store, has filed bankruptcy and will close all 43 of its stores which cover 19 different states.

With conservative numbers, you can say possible 400 employees will be affected. These 400 will find a difficult time in their job search as many places have already staffed up their retail seasonal hires and many had opted not to staff as many as they had during the peak mania of clownsumer spending. This also leaves a further gap in some commercial real estate's cash flows.

Harold's Stores was headquartered in Dallas, TX.

Related:
Rumor: Circuit City to close 150 stores within 60 days
Property, not the Place to Be: AMB Property Hit
I Thought I Saw a Pussycat: Tweeter Eaten
Retail Closure and Unemployment

Another One Bites The Dust: PCS Financial Bankrupt

PCS Financial has declared bankruptcy, after a probable well-placed lien was put on their assets. This company was involved in commercial lending. Hopefully their lending practices were mostly sane rather than funding some enterprise that could only exist in a world where we had rabid clownsumers spending virtually free money that was lent out widely without risk assessment due to negative traditional rates of return in the credit bubble environment.

PCS Financial being a commercial lender deserves a little expansion in thought. Imagine that they had enterprises borrowing from them and imagine those enterprises can not find their funding soruces elsewhere. These will cause a mini chain reaction in shop closures or halted new development projects. Which in turn affect a little bit wider of a view than PCS's 60 employees spending habits.

PCS Financial is based in Chicago, IL.

Related:
What's Old is New Again: Credit Lenders Getting Risk Priced to Actual Market
Bankrupt: Coming Soon to Someone You Know
Put Your Hammer to Rest: USG Corp Bangs Out Layoffs
Max Pain: OfficeMax to do Its Own Layoff

I Thought I Saw a Pussycat: Tweeter Eaten

Tweeter files for bankruptcy as clownsumers don't have the appetite for high end audio gear when their mind is off worrying about their employment.

This intersects commercial real estate, clownsumer spending, and the holiday season quite well. As these stores close, do you really expect some new wave of retail shops to hit these locations? With the clownsumer wallet bolted shut and the credit lines they have being reduced, eliminated, or becoming more expensive; you can be sure there's a 400 foot grinch coming to a town near you.

Related:
What's Old is New Again: Credit Lenders Getting Risk Priced to Actual Market
Rumor: Circuit City to close 150 stores within 60 days
Bankrupt: Coming Soon to Someone You Know
Down the Slope and Off a Cliff: Yellowstone Mountain Club LLC Files Bankruptcy

Rainy Days: Ranieri Co-founded Bank Franklin Bank Saves No More Pennies

Franklin Bank Corp has filed Chapter 7 Bankruptcy. Ranieri was famous for being a part in creation of this derivatives mess that fueled the credit bubble fires.

Down the Slope and Off a Cliff: Yellowstone Mountain Club LLC Files Bankruptcy

Yellowstone Mountain Club LLC has filed for bankruptcy proving that this economic carnage will last a while and hit businesses that are marketed to all tiers of wealth. These guys were selling multi-million dollar lots in Montana fairly close to the Yellowstone park. This done even prior to the thick of the ski season is also a consideration.

Perhaps the idiots who think we are not in a recession or that the recession will be dipped in with a quick recovery due to elected figurehead miracle worker will re-visit here in a year to take a close look at the cold, hard, and utmost predictable facts.

Bankrupt: Coming Soon to Someone You Know

As if October didn't have a lot of terrible data for 'economy is fine' enthusiasts, here is one more. Bankruptcies by consumers passed clear through 100,000. One one hand this resets the debt of the clownsumer, so might enable them to be a bit more free for spending. On the other, it means that they likely maxed themselves out for the final splurge before committing bankruptcy and will not have credit available to them for the foreseeable future.

Add to that, the debt they incurred will now need to be written down by actual people and companies. This is credit destruction in the finest form. Money gone to money heaven. This points to deflationary pressures. Not much good the printing press will do when the banks that lost in this practice need to fill that 'asset' hole.

Timber! Ponderosa falls

Ponderosa has filed for Chapter 11 bankruptcy. Restaurants are not a necessity and is part of a cost of living reduction many people take when the times get tough or have been affected by loss of income or reduced income due to layoffs, job change after layoff, or even reduced working hours. As with reduced shopping, reduced services are to be expected. Suddenly, less ironed shirts are needed or more time is freed up to do the ironing oneself. Less restaurant meals and more cook at home, brown bagged lunches, or fast food. Less car washes. Less spa treatments. More in-home fingernail care. I see the future and it is that trend continuing for some time.

Shoe Pavilion: Al Bundy on hard times

As I was driving around today I noticed some sign holders with the familiar liquidation signs. This time it was at an unexpected corner where there is no Linens N' Things. As I approached I saw that the store in duress is Shoe Pavilion, which made me check this news when I got home. Shoe Pavilion previously pared down their number of non-performing shops and now it looks like all of them are non-performing as they are closing all 64 remaining shops.

This will further hurt commercial real estate. I have already seen several leasing signs where there hadn't been any while the consumers acted like drunks. Well now they have a hangover, to borrow Bush's off the cuff remarks on the economy. The particular Shoe Pavilion that is going down also occupies an area where there is a Halloween shop where a CompUSA used to be. These vacancies are going to begin to severely impact the property owners cash flow. Any commercial real estate owners who used leverage are going to be in a world of hurt. From the Weingarten Realty Investors (NYSE: WRI) recent quarterly report they called out that they have about 800,000$ at risk anually due to Shoe Pavilion leasing arrangements on 3 stores at 46k square feet (Note: They also have 8 Circuit City representing 4 million).

About 500 more frugal folks will be venturing into the holiday shopping season as they wind down their stores and expect a harsh job market when retail dies in January.

Shoe Pavilion was based on Sherman-Oaks, CA.

Retail Closure and Unemployment

Mervyns, a clothing retailer servicing mainly California, has begun the trek of liquidation. This will probably have a relatively minor impact to their competitors from the liquidation mark-downs since their size is not national and there's many left standing in this field. They had 176 stores remaining after beginning the trimming process recently.

A difficult time for their employees for sure. They will lose their jobs into a weak retail environment that has other layoffs and seasonal hiring curbs. Based on this article when they closed 26 stores they had 3,000 laid off workers. While this isn't an exact science we will have to use an estimate since a fairly quick search failed to determine current headcount. Extrapolated up, that makes roughly 20,000 plus HQ. Recent layoffs at the HQ from 1,000 of 250 estimated leaves 750 HQ employees. Around 21,000 will be unemployed (slightly over the high range of the estimate noted here) and many will have difficult replacing their job and income in this environment. That will be a handicap on their ability to service existing debt, take on new debt, or spend freely as if there was disposable income.

This will leave several big box footprints bare on the commercial real estate market. With many prior closures and an abundance of seasonal halloween stores already occupying and Christmas to come. The owner of these strip malls and malls will have a hard time collecting monthly lease cashflow from these.

Mervyns headquarters was in Hayward, CA.

Retail consolidation and more consumers in trouble

Linens N' Things is due to close all remaining stores and liquidate under Chapter 11 bankruptcy. Seemingly this will strengthen others servicing the same consumers in the mid to long term due to less competition. In the short term the liquidation process of discounting comparable merchandise should divert some business from their healthy brethren.

Another side effect of this is that they employ many people (15,000 employees according to this article). With other business on restricted temporary holiday staffing, they may not be able to collect much more than an unemployment check. This will not allow them to service debt in the worst case, add on debt in most cases, nor practice discretionary spending. This will impact unemployment and lower consumer spending.

Their headquarters was in New Jersey and they seemed to provide a decent counter-balance to Bed, Bath, and Beyond. Since retail is due to hurt in the foreseeable future, I wouldn't personally expect BB&B to discontinue their coupon promotional activities. Don't use my word on this since I did not contact BB&B to ask this question.