Brick-and-Mortar Meltdown in June: Who Got Crushed?

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The private-equity protocol of asset stripping bears fruit.

Today, premium-denim designer and retailer True Religion Apparel with 1,900 employees filed for Chapter 11 bankruptcy. Its celebrities-endorsed products are sold in its 140 True Religion and Last Stitch retail stores and in struggling brick-and-mortar department stores, including at Bloomingdale, Nordstrom, and Saks Fifth Avenue.

Bankruptcy rumors had been swirling since October when the company hired a law firm specialized in bankruptcy and restructuring – a dead-giveaway that shareholders and creditors are going to feel some pain.

As so many times in retail bankruptcies, there’s a private-equity angle. Private-equity firm TowerBrook Capital Partners had acquired True Religion for about $835 million in 2013. It took just four years of stripping out assets and piling on debt to reach this magic point.

The court document revealed that the company is now saddled with $535 million in debt, against only $243 million in assets. Asset values are estimated; no one knows what they’re really worth during a fire sale. Dogged by declining sales, the company already closed 30 stores and slashed its workforce. In its last fiscal year ended January 28, 2017, revenues had dropped to $370 million, generating a white-hot loss of $78.5 million.

The court document further revealed that this is a prepackaged bankruptcy, where TowerBrooks worked out a deal with lenders – including funds managed by Goldman Sachs, Waddell & Reed, and Farmstead Capital Management – on a debt-for-equity swap that will wipe out $350 million of its debt. In return for their loss, lenders will get 90% of the equity in the restructured company. Junior creditors and equity holders will get some crumbs of the new equity – but only if they vote to approve the restructuring plan.

True Religion has secured a debtor-in-possession (DIP) loan from Citizens Bank for up to $60 million to fund operations during the bankruptcy proceedings. The company will also use the bankruptcy to close some stores and renegotiate store leases with landlords.




It blamed its fate on the switch by consumers to online retail and on competition, particularly from casual sports clothing for outside of the gym – the “athleisure” segment. It hopes to exit bankruptcy in four months, though it will continue to face the same online retailers, athleisure, and low-price competitors. Restructuring a retailer is notoriously difficult, as American Apparel and many others found out. Most ended up being liquidated.

This latest addition to the ongoing brick-and-mortar meltdown topped off the events of June.

On June 22, Sears Holdings announced that it’s preparing to close an additional 18 Sears stores and 2 Kmart stores by mid-September. Liquidation sales at those stores began at the end of June, a spokesman said. The Associated Press, which reported the store closings, said that they’re in addition to the closing of 226 stores announced so far this year: 164 Kmart stores and 62 Sears stores. The latest bout will trim the company’s footprint to about 1,180 stores, from 2,073 five years ago.

These incessant waves of store closings are systematic steps toward what I can only interpret as the company’s goal of reaching a level of zero revenues. When Sears Holdings last reported earnings, I pointed out that over the past three years, Q1 revenues have plummeted by $3.6 billion, and that at this pace, revenues will be zero by Q1 2020.

But it won’t take that long. In July, 2015, Sears Holdings sold a number of store locations — among the most valuable real estate assets it still had — to real estate company Seritage and leases them back from Seritage. The fraudulent conveyance provisions in the US bankruptcy code come with a two-year look-back period, which expires this July. Management is incentivized to keep Sears Holdings out of bankruptcy at least until then, according to sources cited by Debtwire last December. After that point, all bets are off.

Also on June 22, Sears Canada, which was partially spun off from Sears Holdings, filed for bankruptcy protection in Canada. In the initial order from the court, it was authorized to shutter about a quarter of its stores and lay off “approximately 2,900 people across its retail network and at its corporate head office in Toronto,” it said [Sears Canada Melts Down].

On June 11, Gymboree Corp, the operator of 1,281 children’s clothing stores, filed for Chapter 11 bankruptcy, blaming lower-cost competition from other brick-and-mortar chains and the shift by consumers to online retail. Serious bankruptcy rumors started swirling in April when issues with the interest payment due on June 1 cropped up.

The restructuring plan calls for stiffing its creditors out of about $1 billion and closing up to 35% of its stores. Gymboree, which is headquartered in San Francisco, employs over 11,000 people, and layoffs loom. The company buckled under $1.4 billion in debt, but has only an estimated $756 million in assets.

The private equity angle? PE firm Bain Capital acquired the retail chain in 2010 for $1.7 billion. It then put the retailer through the PE-firm protocol of asset stripping and loading the company up with debt, even as competitors squeezed its margins and its ability to carry that debt.

To stay afloat a while longer, the company mortgaged its distribution center in 2015 and sold Gymboree Play and Music in 2016 to Zeavion Holding, a Bain investor. Now there isn’t that much left to sell.

Bain Capital has been buying up Gymboree’s beaten-down bonds to have more leverage during the bankruptcy and participate in what Bain hopes will be Gymboree’s revival, “a person familiar with the matter” told Bloomberg. The prices for those bonds have collapsed and Bain’s equity stake is essentially worthless. But surely, Bain made its money over the past seven years on this deal through fees and special dividends, and any extra it can salvage in bankruptcy via these bond purchases will just be the cream.

Gymboree’s lenders agreed to provide a DIP loan of $35 million to keep the company liquid during the bankruptcy and to invest $80 million when Gymboree emerges from bankruptcy.

On June 7, Bebe – a desperate women’s fashion retailer that had said in April it would close all its stores and get out of brick-and-mortar retail – announced that it sold its 72,000-square-foot distribution center in California for $22 million and that it would pay $65 million to get out of the store leases. It will try to keep its online business alive via a joint-venture agreement signed with Bluestar Alliance LLC last year and plans to transfer the domain name and international wholesale agreements to Bluestar. After which only the brand lives on.

Over the Memorial Day Weekend, RadioShack announced a surprise liquidation sale “before we close the stores for good.” After the weekend, it closed over 1,000 stores “for good.” By June1, it said that only 70 company-owned stores remain open, in addition to about 500 dealer-owned stores. Back in the day, it had 7,300 stores. In March, its parent company General Wireless had filed for bankruptcy.

This is another example of a retailer bankruptcy that ends in liquidation. Bankruptcy can only alleviate financial pressures; it cannot alleviate the pressures from a once-in-a-generation structural change in retail – the shift to online sales.

The meltdown of brick-and-mortar retail becomes a real-estate question. Read…  The Fate of the Two Shuttered Macy’s Stores in San Francisco




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  77 comments for “Brick-and-Mortar Meltdown in June: Who Got Crushed?

  1. Petunia
    Jul 5, 2017 at 9:07 pm

    I’m surprised True Religion lasted this long, their jeans sell for $100-$200, and you have to be a model to fit into them. Young women don’t have that kind of money anymore and they prefer to shop vintage and thrift, where a good pair of jeans can be as low as $4 brand new. Sizing is also an issue at this price point. Women with money tend to be older and prefer/need a more relaxed fit.

    Although Gymboree is a great store I am not surprised they had a problem. There is a huge market for vintage and thrift children’s clothing. You see middle class moms shopping for used kid’s clothing and there is plenty of it around.

    I looked into the 50% off sale at Bebe a couple of weeks ago and ~$150(on sale) for a fake leather jacket is a lot. The clothing is also sized for the younger more fit customer. The American woman is aging and more than half the women wear a size larger than 14 and the stores that don’t get that will all be closing.

    • Jay
      Jul 5, 2017 at 9:13 pm

      Well said

    • Squid
      Jul 5, 2017 at 10:04 pm

      Thank you, Petunia, for an enlightening comment. I still prefer to believe that these rotters are finally getting what they deserve for a nakedly blasphemous trade name.

      • t b t
        Jul 6, 2017 at 10:47 pm

        T B T
        Amen

    • fajensen
      Jul 6, 2017 at 4:43 am

      My daughter is aggressively buying used and vintage for herself and the children. She is not stingy, she will drop money where it matters, like on shell-suits for the children (they burn a lot of calories running around, so they will sweat and get cold in non-permeable clothes).

      She thinks it is stupid, wasteful, to pay 800 EUR for a new pram when she can buy a used one in mint condition for 250 EUR.

      I am very proud of my daughter for handling her money so well.

      Young people, at least the ones I know, they seem to have adopted an “it’s your money or your life” philosophy: The money one has basically comes from trading away something irreplaceable, Time, for something so infinitely available that it’s not even real – Money.

      They will look at the expensive, blingy, item and think every time: “That was X hours of my life going to the landfill”. They invest in experiences instead.

      I think we are on the edge of some real change here, the old fighting the new struggling to be born, kind of thing.

      The way the polls seem to be off everywhere (Japan, latest), renowned go-to experts and political spin-people swinging wide and the rapid decay of media stables into hysteric screeching.

      That tells me that something New is coming, something nobody knows exactly what is yet*. So the “people in the control room” are babbling, guessing and guessing wrong.

      I believe that the old ways are running on inertia and fumes, the process parameters are “looking funny” because the energy is going somewhere, there is a massive crash / transition / phase change coming.

      • QQQBall
        Jul 6, 2017 at 10:56 am

        250 for a pram… you gotta be kidding me?

      • Pat McKim
        Jul 6, 2017 at 10:58 am

        I’m not so sure the generation you speak is as wise you make them sound “trading away something irreplaceable, Time, for …. experiences instead. ” If this is the case why do they spend so much time trying to impress everyone on social media and being so glued to their i-Phones that they miss the beautiful day they have in front of them. I find many of them more caught up in the “look at me and what I’m doing ‘experience'” and missing the full reality of life. Sir Francis Bacon wisely said, “Prosperity doth best discover vice, but adversity doth best discover virtue.” Very few of any generation has experience any adversity to speak of and their lack of true comradeship found mostly in the military has been replaced by some amorphous “team building.” I see a lot of self congratulating snow flakes

        • Mark
          Jul 6, 2017 at 12:44 pm

          “Kids these days…”

          I personally enjoy each generation’s disparagement of their subsequent generation. This one has plenty of vice. None had more virtue than ours!

    • bvian
      Jul 6, 2017 at 9:37 am

      I worked in fashion for a long time. Some of this is right- high priced denim has been “over” for awhile. Brands like Blank NYC stole True Religions’ business by putting out good quality denim at an $88 price point. And that is the real point of what happened in clothing, more so than the brick & mortar vs. online narrative. After the recession, the consumer that would buy contemporary brands at $200-$400 disappeared and never came back. Stores needed everything to be priced at $98 or less, which also means less profit so you have to turn over a lot more product in the same time frame. Simultaneously, China (where everything is made) was having a hard time finding skilled workers for the sewing factories. Younger people did not want to work in factories so the owners had to pay the highly skilled older workers more money to keep them. The cost of labor kept going up while pressure to keep prices down at retail was also happening. Almost every contemporary brand in fashion is struggling to figure out how to handle this while also beating back the fast fashion brands that are eating into their business.

      • Petunia
        Jul 6, 2017 at 1:12 pm

        The fashion business committed suicide in much the same way the medallion taxi business did, by abusing the customer.

        I was one of those $200-$400 per item/outfit customers and I stopped shopping that way even before the financial crisis. It was basically two different events that killed the fashion business for me. The first was seeing a Mizrahi white button down shirt, nothing special, selling for over $200. The final killer was seeing a handbag in Vogue magazine selling for $32K, the same price someone I know had just paid for a BMW.

        You’re right about the $100 price point now. I rarely ever exceed it.

        • Frederick
          Jul 7, 2017 at 5:32 am

          The heck with that I rarely exceed 20 bucks and am perfectly happy A hundred dollars for some ridiculous ripped jeans is sinful in my opinion anyway

      • chris Hauser
        Jul 6, 2017 at 5:52 pm

        i remember when it was normal that premium denim was 300 a pair, and it was normal to pay it, for the look, the prestige, the need.

        i remember paying 40 (forty) for a pair of jeans, still have them. can’t remember why i paid that much, seemed i thought they were worth it.

        i would hazard tower brook lost money.

    • TJ Martin
      Jul 6, 2017 at 9:40 am

      The problems with True Religion started when they tried to grow beyond boutique niche market downmarket into the general market place .. placing all their emphasis on brad only sacrificing all aspects of quality and originality … because in reality Petunia there are a host of boutique/niche jean stores across the nation and world selling jeans in excess of $500 – $2500 ( and beyond … as in way beyond ) a pair .. with those boutiques barely able to keep up with sales .

      As for the ….

      ” Women with money tend to be older and prefer/need a more relaxed fit ”

      … comment … nothing unfortunately could be further from the truth . Spend a little time around women with ‘ money ‘ and you’ll find they are either fit as an emaciated bean pole ( surgically , fitness or otherwise ) … or they cram their size 14 bodies into size 8 jeans and clothing in the vain attempt to maintain a semblance of youth .

      • Petunia
        Jul 6, 2017 at 1:30 pm

        I don’t disagree women with money are thin, they can afford the drugs. But I disagree that they buy many pairs of expensive jeans.

        Pre financial crisis someone I know was in Canada and bought a pair of $1500 jeans, beautifully embroidered, and declared them at customs. The customs agent practically went into shock when they were told the expensive item was a pair of jeans. They insisted on inspecting them and called over all the other agents to look at them too. The agents obviously had no idea what expensive jeans look like.

    • tony
      Jul 6, 2017 at 12:38 pm

      relaxed fit i like that

  2. idahoPotato
    Jul 5, 2017 at 9:13 pm

    “Between 2001 and 2016, jobs at traditional department stores fell 46%, according to Labor Department data.

    That’s a much steeper drop than other troubled industries. For example, coal mining jobs dropped 32% during the same 15 years. Factory employment fell 25%.

    About 60% of department store employees are female, compared to 47% of workers overall. Minorities, the elderly and teenagers are also far more likely to find jobs in department and discount stores than they are elsewhere. Teenagers hold 8% of department store jobs, compared to 3% of jobs overall.”

    from CNN

    These demographics are going to find it much harder to find other employment.

  3. AlbieOk
    Jul 5, 2017 at 9:39 pm

    How are these private equity shenanigans not prosecuted as fraud? So many of these deals follow a pattern that enriches only the ownership.

    • Suzie Alcatrez
      Jul 5, 2017 at 10:07 pm

      This was the plot in the latest season of Fargo.

      • LBJ
        Jul 5, 2017 at 10:22 pm

        Wells Fargo too.

        • Wilbur58
          Jul 5, 2017 at 11:06 pm

          Great comment, LBJ!

      • intosh
        Jul 6, 2017 at 2:11 am

        Thanks! I wasn’t aware the new season is out. Time to escape to a world where crooks generally get what they deserve…

    • Jas
      Jul 5, 2017 at 10:07 pm

      It is difficult to prosecute intent. Just look at all of the cases against wall street banks, hedge funds after the 2008 crash, I think there was only 1 or two convictions.

      • Quinn
        Jul 6, 2017 at 5:59 am

        Congress has to get elected, and the ones who can pay are the ones that can play. ;^)

      • Drango
        Jul 6, 2017 at 7:12 am

        There were far more settlements than prosecutions. I wonder how many banksters that got away with a slap on the wrist are now paying customers of Erik Holders law firm, and how many contributed to pay Obama hundreds of thousands for a short speech?These two have no shame, but who needs shame when you can line your pockets with Wall Street money?

      • Frederick
        Jul 7, 2017 at 5:33 am

        Jon “the slime” Corzine comes immediately to mind

    • r cohn
      Jul 6, 2017 at 8:23 am

      I am amazed that anyone will loan to these crooks
      Part of the solution is to limit the amount of interest that can be deducted as an expense

  4. Truth Always
    Jul 5, 2017 at 10:01 pm

    Who are the morons that let PE companies pile more debt into these seemingly insolvent companies?

    If I am a creditor, shouldn’t I be immunized to the Modus operandi of the PE Firms? Why then would I lend them anything if I know I would barely get pennies on the dollar, if at all?

    I realize individuals may get scammed but how do institutional investors fall for this charade?

    • Akam15
      Jul 5, 2017 at 10:32 pm

      Because the genius group known as the Fed drove bond yields to near zero with QE infinity and pension funds and other fixed income investors were forced to search for some kind of yield and bought these bonds. And 8 years after the financial crisis the Fed is just thinking about shrinking its balance sheet. And the financial pundits on TV say it’s still too early to raise rates. Cone on people, this is the greatest financial con job in history.

      • TJ Martin
        Jul 6, 2017 at 9:56 am

        It aint the FED thats pouring money down those financial blackholes … its the overly optimistic investors blinded by the delusion that everything can only go up from here regardless of the reality on the ground that are dumping $$$$$ of theirs and their lenders money under the pretense of investing into the multiple corporations be they manufacturing , brick and mortar , virtual etc that have not seen a dime of anything even resembling a profit

        An interesting sideline to this and all of what Wolf and others have been reporting over the past 24 months ;

        Over the 4th weekend the wife and I watched an extensive documentary on the US in the 1920’s leading up to the Great Depression using multiple newsreels and radio broadcasts to illuminate what was going on and what the attitude of the general public and business communities was back then .

        The scary thing was if you closed your eyes .. what with auto manufactures having a glut of stock .. stores closing down … 80% of purchases being made with credit .. and alarming rise in debt etc etc etc …. all exacerbated by delusional optimism you’d of sworn you were listening to a contemporary financial news broadcast .. …

        Which then begs the question … a) how much longer till our House of Cards comes tumbling down on our heads ?

        Or alternatively ;

        b) Are we here just a bunch of ‘ Chicken Little’s ” waiting for the sky to fall ?

        Personally … I’m going with .. a)

        • TJ Martin
          Jul 6, 2017 at 11:45 am

          PS; Wolf … one day … one fit … give me a break mate !

        • Jul 6, 2017 at 12:38 pm

          OK. But take it to heart.

      • Frederick
        Jul 7, 2017 at 5:36 am

        Yes it is and yet the sheeple stay at home on the couch with a slice of pizza a beer and a remote so all is good Pardon the pizza but I couldn’t help myself Are you listening John Podesta?

    • fajensen
      Jul 6, 2017 at 5:21 am

      What should they do? On the institutional level Money has to go somewhere and there is too much of it to bother with details.

      On the individual level it turns out that bad decisions are a team effort by the best experts available.

      What happens is that one goes to all these big meeting with maybe 20 people and five managers invited, to listen to stupid and dull people running 75++ slides of PowerPoint summaries of 35 page shiny-shiny reports made on high-quality paper by highly-paid consultants.

      One may in the beginning study the details and question and complain, but after while one will get branded a “troublemaker”, not a “team player”, that damn guy always dragging out these meetings, none of which will move the needle on the next salary or performance review.

      After a while, one will stop going to these things at all and “work” other channels to get results, or find another job if attention is mandatory. Even though no one ever gets fired over anything apart from theft and sexual harassment, just being involved day-after-day, will eventually become a burden on ones soul.

      The net effect is that overall stupidity and dull thinking accumulates and the sociopaths take over, because they can take it. The Wikileaks dump of the Podesta mails shows exactly this mechanism.

      – Or –

      John Maynard Keynes,

      “A sound banker, alas, is not one who foresees danger and avoids it, but one who, when he is ruined, is ruined in a conventional way along with his fellows, so that no one can really blame him.”

      Original quotation from “The Consequences to the Banks of the Collapse of Money Values”, 1931.

      • Bee
        Jul 6, 2017 at 9:13 pm

        I got in trouble for not volunteering to make food for a “team” potluck (that I didn’t participate in). I also got in BIG trouble for not volunteering to work on a Saturday.
        I guess my definition of “volunteering” is different from that of the corporate sycophants. Still trying to recover from that soul-crushing hellhole.

    • Quinn
      Jul 6, 2017 at 6:06 am

      This is just another bout of corporate raiding – buy a credit worthy company, hopefully flush with cash, remove all the assets through payouts to owners, dividends, etc. load the company up with debt and sell it. Old, old formula for legal stealing.

      Another version emerged where you fire all of the stateside employees & move manufacturing overseas where you can hire cheap labor. It was called ‘offshoring’ at the time, I seem to remember. This will continue until either the U.S. hits bottom, or there are term limits and no lobbying in congress. It’ll take a while either way. ;^D

    • Kent
      Jul 6, 2017 at 7:37 am

      “I realize individuals may get scammed but how do institutional investors fall for this charade?”

      Institutional investors are generally “investing” other people’s money, not their own. Perhaps they can financially benefit personally, even if they lose the investments they manage?

      When politicians talk of “deregulation”, this is what they are really talking about.

  5. nick kelly
    Jul 5, 2017 at 10:21 pm

    I was surprised to find (supposedly) that the Sears in my Vancouver Island city is NOT closing.
    I think this may have something to do with the fact that the mall it anchors is mostly empty.
    Armed with the bankruptcy ability to walk away from the lease, I think they may have negotiated a very sweet deal on new lease.
    Like maybe low payments or nothing until biz improves.

    • Paulo
      Jul 5, 2017 at 10:46 pm

      Are you in Nanaimo Nick?

      And a question about Radio Shack for anyone who knows. That is also The Source, is it not? I just looked it up on Wiki and it said itt was a newer version spin off.
      Anyway, we have one in Campbell River and somehow it stays open. Just how is anyone’s guess. I went in to snoop a few years ago and for a few resistors I needed but they basically had nothing. I ended up getting what I needed at a high school.

      • Pete
        Jul 6, 2017 at 4:01 am

        Paulo, Radio Shack stores in Canada were taken over several years ago by some division of Bell (BCE Inc.) and indeed re-named “The Source”. So there is no connection anymore between “The Source” (Canada) and “Radio Shack” (U.S.).

        Bell’s purpose was to provide an additional distribution channel for their cellular services, not to remain a place where do-it-yourselfers and hobbyists could find a large selection of electronics parts.

    • Quinn
      Jul 6, 2017 at 6:26 am

      How busy are they, Nick, & what’s their competition? If they are the only box store in the area, they might be able to survive, or thrive.

      I live in a rural county in Florida & Walmart dominates in my area with 2 super stores within 12 miles of each other. The Sears Catalogue Center & the Kmart closed, & other than supermarkets & hardware stores, there are no other box stores to compete with them. They’re thriving.

      Leases for anchor stores in large malls are usually very cheap since they are the ones who paddle the canoe. ;^)

  6. Bin
    Jul 5, 2017 at 10:23 pm

    It used to be just us smart guys had pc’s and were able to order online. Now that everyone has a smartphone, it’s all over.

    • Quinn
      Jul 6, 2017 at 6:10 am

      And yet Amazon just bought Whole Foods. ;^)

  7. walter map
    Jul 5, 2017 at 10:24 pm

    “How are these private equity shenanigans not prosecuted as fraud?”

    Financial fraud was legalised years ago. Wall St. insisted. It’s why banksters don’t go to prison. They spent a lot getting the laws and regulations corrupted this way, and it was an exceptionally good investment.

    For decades, toth political parties have been in a contest to see which can sell out the country most efficiently and still get elected, each with its nasty strategies and tactics. Democrats were at least willing to preserve some semblance of normalcy, a weakness Republicans do not share.

    After a few hundred of these sorts of stories one might get the impression the U.S. economy is being systematically liquidated in favor of labor markets that are easier to exploit and regulatory regimes which are essentially nonexistent. How obvious does it need to be, really?

    “These demographics are going to find it much harder to find other employment.”

    Yeah, well, so what? The electorate has no choice but to continue voting to have itself bled to death. It’s their masters who select their candidates. All others are systematically discredited. The fatal flaw of democracy is the inevitability of electing people to high office whose real goal is to destroy it for fun and profit. These days they barely bother with the pretenses.

    • Dan Romig
      Jul 6, 2017 at 7:42 am

      Walter, you are quite correct in your comments about Wall Street insisting on having financial fraud legalized and the electorate having no choice.

      While Wolf does not want this site to be politicized, it is pretty clear that the two-party duopoly has encouraged private-equity firms to engage in the leveraged plunder of the companies he writes about.

      “The fraudulent conveyance provisions in the US bankruptcy code come with a two-year look-back period, …” pretty much sums it up.

      Premium-denim designer and retailer True Religion Apparel??? Hell, “I wear Wranglers or nothing at all!”

      • mean chicken
        Jul 6, 2017 at 9:57 am

        “or nothing at all”

        (Spits out coffee through nose): Way too much info! I’m still getting used to the idea of a society that shares everything.

        • Dan Romig
          Jul 6, 2017 at 10:24 am

          Sorry, Just a bit of sarcastic humor. I do not understand the appeal of blue jeans that cost over a hundred bucks a pair, and that’s my answer to that phenomenon.

      • Lotz
        Jul 6, 2017 at 12:15 pm

        Funny you should mention wrangler as the wife got a pair of wrangler shorts at a popular retail store but they fit horribly ! Looked like I was walking around with my pants down to expose my underwear (((culture))) so had her return them and I’ll just get what I want online.
        Just like the dumbing down of America the retailers got so cheap in search of margins they alienated customers that have money.

        • alex in san jose
          Jul 6, 2017 at 6:12 pm

          That’s funny because Wrangler “pro rodeo” jeans were my go-to when I rode a motorcycle. Cheap at $20 a pair, durable, functional, I’d roll up the cuffs more for an extra layer around my ankles than cool factor but it did add some cool factor.

    • KMOUT
      Jul 6, 2017 at 10:09 am

      Robert Rubin and his buddy Cornpone Bill did more to wreck the joint than any Republican. Glass Steagall was Rubins push my friend. Then Rubin takes a job at Citi for the fortune he earned as a govt hack.

      • Smingles
        Jul 6, 2017 at 3:36 pm

        The Gramm(R)-Leach(R)-Bliley(R) Act was a bipartisan effort, although the vast majority of dissenters were Democrats. Only 5 Republican Reps dissented, while about 50 Democrats did.

        Even if Clinton vetoed it, the act EASILY had enough votes to override the veto. Not even close. It passed with about 80% approval.

        • Dan Romig
          Jul 7, 2017 at 6:34 am

          Clinton did veto the initial Senate bill in May 1999 after it passed 54 to 44, but he had it rewritten. Neal Wolin was the architect of the final draft which was signed into law that November.

          Obama appointed Wolin to be Geithner’s deputy of Treasury right after he was inaugurated for the first term as a reward for letting Wall Street implode the economy.

  8. Recommended readings
    Jul 6, 2017 at 5:01 am

    Can someone recommend reading about what Wolf says with respect to the bankruptcy code and the two year look back period for fraudulent conveyances? I’d be interested in learning more about what happens in cases such as the one mentioned above, both from a legal and financial perspective.

  9. Dave
    Jul 6, 2017 at 5:08 am

    What is the legal age to be an asset Stripper ? lol

  10. unit472
    Jul 6, 2017 at 5:16 am

    Its been a long time since all but the top end retail stores offered any ‘service’ so, other than to get out of the house, why visit them? You have to walk from the vast parking lot into a giant store where you don’t where the item you want is located, pick through a stack of clothing in the hope you find the size you require and then try and hunt down a clerk to ring your sale up.

    If you buy ‘on line’ you get better service. You need only select the item and size you want and they go get it and send it to you. You ring the sale up yourself and the package arrives at your house.

    • Wilbur58
      Jul 6, 2017 at 9:14 am

      Um, sorry… but not really.

      Personally, I’d rather be able to try something on than order medium or large and hope for the best.

      As far as service goes, I think you’re exaggerating. Out in the malls of America, there are plenty of people around to help you at the various retailers. If anything, I can find them a nuisance if I want to be left to shop on my own. It’s only if I can’t find my size that I look for help. But it’s not like there’s no one there to say, “Can I help you sir? Finding everything okay?” Happens all the time.

      • Frederick
        Jul 7, 2017 at 5:42 am

        Wilbur they are actually just watching out for shoplifters when they keep eyeballing you and follow you around the store They are getting killed by shoplifting lately from what I hear

  11. walter map
    Jul 6, 2017 at 8:09 am

    Asset-stripping companies is one thing. Asset-stripping entire countries is quite another, and that also goes on all the time.

    It shouldn’t be allowed, but the ones doing the stripping are also those who have bought control of governments and have corrupted them into allowing them to do it.

    Asset-stripping the planet is what you should be most worried about. That also goes on all the time and is accelerating. It’s suicidal. When the mall gets deserted you can shop somewhere else. When a country is impoverished you can try to emigrate, good luck with that. But there is no good way off the planet for anybody, and only one bad way, even for ravenous asset-strippers, and they really don’t care about anything but stripping assets. Really.

    • Wilbur58
      Jul 6, 2017 at 9:20 am

      Amen, brother.

      I still can’t believe that Chicago sold its parking meters. That’s outrageous to me.

      You really have to wonder how long it’ll be before we have “The California Beaches, brought to you by Amazon”, where you pay a fee to get in. Or perhaps the “Goldman Sachs Yosemite Park”.

      And there will still be idiots who think that private means more efficiency and better pricing.

      • QQQBall
        Jul 6, 2017 at 11:02 am

        The most outrageous part is it was for 80 years. You NPV the CFs and the discounted out years contribute very little to the bottom line. They could have done 20- or 30-year base terms… the lessee can spin that lease in 30 years and still have 50 years remaining.

  12. Petunia
    Jul 6, 2017 at 10:14 am

    One of the least known and understood aspects of Bain is that it functions in two conflicting arenas, one is private equity and the other is management consulting. Although both groups may be legally separate, they are both the creatures/creations of Bill Bain.

    While the management consulting group is learning all there is to know about a company in order to “help” them and charging a fortune too. The other Bain is …well you know.

    • walter map
      Jul 6, 2017 at 11:06 am

      “two conflicting arenas, one is private equity and the other is management consulting”

      They’re not conflicting at all. The one feeds the other.

      “While the management consulting group is learning all there is to know about a company in order to “help” them and charging a fortune too. The other Bain is …”

      Using that information to strip the company.

      Call it a business model.

  13. beadblonde
    Jul 6, 2017 at 10:43 am

    This is unimportant, just some creative destruction. I am advised that millennials are spending their vast winnings on experiences, travel and leisure, beautiful new phones, and virtual reality gizmos while they are transported in artificially intelligent self driving battery powered vehicles and tracked by great big data miners who can predict their every next move. Given enough liquidity (and we are promised there will be enough) the sky is the limit. You say you’re skeptical. Well, can I frighten you with North Korea? How about the wonderful money making opportunities that follow the failure to replace ObamaCare?

  14. Boiled Coffee
    Jul 6, 2017 at 11:05 am

    Whenever I read these retail bankruptcy stories, particularly with PE involved, I am always reminded of the scene from Goodfellas where they acquire a restaurant, load it with debt, defraud vendors and then light the whole thing on fire at the end to collect the insurance. I am not sure how that is any way substantially different from the story of any of these companies.

    • walter map
      Jul 6, 2017 at 12:58 pm

      The mob went legit and traded in the back-alley dealing for Wall St. corner offices. They can still do the same loan-sharking, money laundering, tax evasion, and gambling rackets like they always have, but this way they can do it legally as respected businessmen and avoid the RICO laws.

      Nobody talks about the Mafia any more. Now you know why.

  15. GSH
    Jul 6, 2017 at 11:36 am

    Interesting discussion. Nobody cares for the PE companies and the process is not pretty but aren’t they serving an important function as the carrion eaters of our economy?
    Obviously, the original owners of the companies in question got paid well – otherwise they would not have sold. The PE companies bet that the assets are worth more in pieces as compared to a going concern. Nothing wrong with that. The quaint concept called “creative destruction”. The only potentially unethical behavior I see is the “dumb” pension money allowing them to leverage up these failing companies without true due diligence.

    • Rg
      Jul 6, 2017 at 11:53 am

      I’m pretty sure it’s the management that gets enriched rather than the shareholders in most of these deals

    • walter map
      Jul 6, 2017 at 12:00 pm

      “aren’t they serving an important function as the carrion eaters of our economy?”

      They’re creating the carrion. You can expect the entire corporate economic base of the U.S. to be globalized and cleaned out in due course.

      ‘The quaint concept called “creative destruction”.’

      Interesting how the ‘destruction’ is always selective. Otherwise the TBTF banks that are still running the show would have been broken up in the last meltdown, when most of those destroyed happened to be the customers they victimized.

      Some call it ‘creative’. Others call it ‘engineered’.

    • Kent
      Jul 6, 2017 at 12:53 pm

      Creative destruction is a faster, better company with a better set of products taking out an old, incumbent vendor.

      I’m not sure how this relates.

    • JB
      Jul 6, 2017 at 2:57 pm

      good point . There are winners and losers in these types of endeavors. As long as government, with tax payers money, doesn’t bail out the losers OR the feds doesn’t monetize any financial instruments I ok with it . The losers, in the case of True Religion Apparel, are the funds managed by Goldman Sachs, Waddell & Reed, and Farmstead Capital Management
      So be careful where you invest your money. If enough of these strategies lose money , investor money will dry up. The system will self correct .

  16. TheDona
    Jul 6, 2017 at 12:17 pm

    First of all the jeans average 250.00. Check out these hideous Men’s jeans for 369.00: http://www.truereligion.com/ricky-straight-super-t-mens-jean/MDA859N21E.html?color=DXXM

    They also missed the memo that most of their stuff looks dated by 10 years and is way too expensive for current Millennials. The company has been asleep at the wheel for a long time.

    Blaming their failure on internet sales is ridiculous. Women need to TRY jeans on as the fit can vary to the point of absurdity. Yes women wear leggings and yoga pants more now, but one always needs jeans. IMO, the reason women have switched to more leggings/athleisure is because the hunt for a nice fitting pair of jeans has become next to impossible without trying on 20 pair to find a pair that fits. No Thanks. The Gap is facing this inconsistent fit dilemma with its online ordering….the amount of returns is killing them.

    Gymboree should just go to an online presence or give it up altogether. They were a special niche 30 years ago but now they don’t really offer anything Target or Walmart doesn’t have.

    The time has come and gone for these companies. So what. The fact that they fell for the PE scam as a last ditch effort is the failing company’s fault.

    • alex in san jose
      Jul 6, 2017 at 6:15 pm

      5.11 “tactical” stuff is my present equivalent of jeans. Looks smart (as long as you don’t go full BDU) lasts a long time, sturdy, and yeah it’s $50 for a pair of pants or shorts but it’s $50 well spent in my book.

      I buy online if I can’t find it locally, and if I know just what I’m getting. My local cop store didn’t have any shorts in, so I bought my latest pair on Amazon. They had belts in stock though, so they got my money there.

  17. Opalchip
    Jul 6, 2017 at 11:15 pm

    A lot of this is independent of P.E. or the internet, or Amazon. It’s just the fashion industry cycle. I’ve been on Wall St. since 1981 and watched it happen over and over. Unique fashion concept gets hot, grows quickly, raises money/goes public, stock gets crazily overvalued, company overexpands, puts bean-counters in charge, opens in outlet malls, loses “hipness”, (then P.E. shows up to “help”), issues debt to keep “growing”, POOF!

    • Opalchip
      Jul 6, 2017 at 11:17 pm

      btw – the next one, that “nobody saw coming” – LULU

      • Petunia
        Jul 7, 2017 at 12:15 pm

        I’m still wearing stretch pants from the 80’s.

    • TheDona
      Jul 7, 2017 at 1:26 pm

      Opalchip – Bingo! You have summed it up nicely. Not to mention the quality and fit go out the door due to the bean counters. Game over.

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