store closings – The Burning Platform

AND IT BEGINS

Last year it was the polar vortex that caused retail sales to be terrible at Christmas. This year it was too warm. How come it can never be just right? What a load of bullshit. If Macys really believed their bad sales was due to warm weather, why the fuck would they announce the closing of 36 more stores and the firing of 3,000 more employees? Who does that because of weather?

This is just the beginning. It is only January 6. Over the next month dozens of retailers will report atrocious results. Some might report positive sales, but they needed to slash prices to achieve any sales gains. Profits will be non-existent. Sears, JC Penny, and numerous other bricks and mortar retailers will announce the closings of hundreds more stores. There will be 5 to 10 retail bankruptcies in the next few months. Ghost malls will become spookier.

This always happens when the economy is recovering. Right? The consumer doesn’t have a pot to piss in. They can’t handle a $500 emergency expenditure. They’re up to their eyeballs in auto, student loan and credit card debt. An economy built upon people buying shit they don’t need with money they don’t have has hit the wall. I wonder who could have foreseen the collapse of retail in America.

Oh yeah. That was me.

Macy’s cuts costs, and thousands of jobs

By Chelsey Dulaney

Published: Jan 6, 2016 4:45 p.m. ET

Shares of Macy’s, down 44% over the past year through the close Wednesday, rose 3.4% to $37.38 in after-hours trading.

Macy’s, which called its 2015 performance “disappointing,” said it expects to cut about 3,000 associate jobs across its stores and implement a “voluntary separation opportunity” for about 165 senior executives. It also will cut 600 back-office jobs and eliminate 750 jobs by consolidating call centers.

Continue reading “AND IT BEGINS”

DID IT SNOW IN APRIL TOO?

You may have heard the standard Wall Street storyline about bad weather from December through March depressing consumers and keeping them from spending money they don’t have on shit they don’t need. The corporate mainstream media obligingly regurgitates the storyline in order to maintain their advertising revenue from Wall Street and corporate America.

Did you notice all that snow in April? How else can we explain the disastrous retail sales numbers reported this morning? Maybe the temperatures were too moderate to shop. Maybe the pollen storms created an allergy to shopping. Maybe it was those nasty Spring showers bringing May flowers. Watching the nimrods, economist hacks, bimbos and boobs on bubblevision attempting to spin the decline of the American consumer is priceless. They reveal themselves to be nothing but captured teleprompter readers. Journalism is dead in the corporate media realm. The only truth is found in the blogosphere.

Below is a chart that doesn’t even reveal how bad the numbers really are. The country is in the midst of a recession as markets reach all-time highs. This fact alone unveils the criminality of the Federal Reserve and their sole purpose of propping up and enriching their owners on Wall Street. The suffering and impoverishment of average Americans is revealed in the true jobs numbers, credit card usage, and retail sales. The entire house of debt is built upon Americans accounting for 68% of GDP by buying shit. If they don’t borrow and spend, the shark dies. This shark looks sick.

Continue reading “DID IT SNOW IN APRIL TOO?”

J.C. PENNEY HAD SUCH A GREAT CHRISTMAS SEASON THEY ARE CLOSING 40 STORES & FIRING 2,250 EMPLOYEES

Yeah. Major retailers always close stores when sales and profits are great. Funny how they decided to announce this one day after the 20% surge in their stock price based on a miniscule increase in comp store sales. The avalanche of store closing announcements from other retailers to follow.

JC Penney to close 40 stores in 2015

Krystina Gustafson |

J.C. Penney said Thursday it will close about 40 stores over the next year.

The closures, which represent nearly 4 percent of the 1,060 Penney U.S. stores, will affect about 2,250 employees, according to spokesman Joey Thomas.

Penney’s stock was down 1.8 percent in morning trading Thursday.

Most locations will close on or about April 4, Thomas said.

“We continually evaluate our store portfolio to determine whether there’s a need to close or relocate underperforming stores,” Thomas said. “Reviews such as these are essential in meeting our long-term goals for future company growth.”

The announcement comes one day after the retailer said that its same-store sales rose 3.7 percent during the crux of the holiday season.

Analysts have been calling for J.C. Penney, along with other retailers that they consider to have too many locations, to downsize their store counts.

By shuttering underperforming stores, retailers are able to cut costs in an environment when more sales are taking place online.

Just Wednesday, struggling teen company Wet Seal said it is closing 338 retail stores effective immediately. Last month, Sears announced that it would accelerate its store closing plan from 130 underperforming stores to 235.

Belus Capital Advisors analyst Brian Sozzi said these announcements would be far from the last.

“You will hear more, big-time store closure announcements within the next month,” he wrote in an email.

Retailers typically announce pending store closings in January. Last year, Penney’s announced 33 closings during the month.

Thomas said that eligible employees who do not remain with the company will receive benefits and, when possible, assistance in finding a job at a nearby store. The retailer will also offer an on-site career training class.

TWO RETAILERS DOWN, WET SEAL & RADIOSHACK CLOSE BEHIND

Delia’s and Deb Shops filed for bankruptcy in December. That’s 438 more vacant storefronts across America. Now Wet Seal will close at least 338 more stores, and likely all 500 when they file for bankruptcy in the next couple weeks. Then the biggie. RadioShack will end up closing 5,000 locations when they file for bankruptcy in the very near future. Once the financial results are reported in February for all the major retailers you will see announcements from Sears, JC Penney, Macys and many others closing hundreds or thousands of more stores. Sure sounds like a consumer driven economic recovery.

Wet Seal may be too late to stave off bankruptcy

By Andria Cheng

Published: Jan 7, 2015 12:16 p.m. ET

Teen retailer is closing most of its stores and laying off staff

NEW YORK (MarketWatch)—Teen retailer Wet Seal Inc. said Wednesday it is shutting two-thirds of its stores as it races to shore up liquidity and keep its operations afloat. But it may be too late to avoid the fate of former rivals Delia’s and Deb Shops, which filed for bankruptcy protection in December.

Already, a lender on some of the company’s senior convertible notes has issued a default notice with a deadline of Jan. 12. Unless Wet Seal meets its obligations or strikes a new agreement, the company is facing bankruptcy, said former bankruptcy attorney David Tawil of hedge fund Maglan Capital.

“I don’t think that there is a good chance (of it surviving) unless there is a trick up someone’s sleeve that we haven’t seen yet,” Tawil told MarketWatch. “It has been a long time coming.”

Wet Seal didn’t respond to a request seeking comment.

Wet Seal said the store closings came after it failed to get concessions from its landlords. The retailer, once a destination for teen and college girls, has lost sales to other fast-fashion players such as Forever 21 and H&M.

The teen sector has generally underperformed the broader retail segment, and other companies including Aéropostale Inc. ARO, +2.23% and Pacific Sunwear PSUN, +4.55% also are expected to shut stores this year. The sector is battling the trend in which teens are shifting spending to electronics and other items over fashion.

Read: here are some fashion stocks to buy and to avoid in 2015.

Wet Seal CEO Ed Thomas, who returned in September after heading the company from 2007 to 2011, has admitted the company has gotten “off-track,” skewing toward a younger customer with too much basic merchandise.

Thomas has promised to return the chain to “a fast-fashion model with emphasis on fashion product” that provides “constant newness.” The company will focus on fashion assortments over basics and define its target customer as 18-24-year-old women.

But that may be too late. Wet Seal has lost money in eight of the past 10 quarters, and is expected to lose money the next two quarters, according to Retail Metrics. Its comparable sales dropped 11 of the past 13 quarters. Holiday-quarter sales are expected to slump another 9.7%, after a 14.% drop in the third quarter, Retail Metrics data showed. Cash and cash equivalents tumbled 37% to $19.1 million as of Nov. 1 from a year earlier.

Some employees on Wednesday posted signs in store windows, with the hashtag #forgetwetseal, complaining that the company didn’t give them any prior notice of the closures and they weren’t paid for unused vacation and sick time.

“It’s possible but very unlikely” it will survive, said Retail Metrics President Ken Perkins.

It will be an uphill battle, he said.

MORE SIGNS OF ECONOMIC RECOVERY: DOLLAR STORES COLLAPSING

Family Dollar stores have been a Wall Street darling for over a decade. Its stock rose from $5 in the late 1990s to $77 in the last year. It has sales of over $10 billion and operates 8,100 stores in 46 states and employs over 34,000 full time employees. It is the canary in the coal mine for lower income and middle income families in this country. Based on their latest earnings report, the canary has a terminal disease. During the quarter where they do there biggest business, they saw their revenue plunge by $170 million, with same store sales down 3.8%. Their profit COLLAPSED by 35% over the prior year. Their results were a fucking disaster. They are so optimistic about the future that they have decided to close 370 stores. That’s a sure sign of economic recovery. Right?

While the stock market soars to new heights through the magic of HFT front running by the Wall Street shysters, the real people in the real world have run out of money to spend at dollar stores. I guess the new hot retailer will be the Family Dime Store. Oh yeah. We had those back in the 1960s and 1970s before the Federal Reserve destroyed another 80% of our purchasing power with that non-existent inflation.

Observe what is happening. Don’t listen to what they are saying.

Does this chart explain anything?

Family Dollar shares fall after earnings miss

NEW YORK (MarketWatch) – Family Dollar Stores Inc. (NYSE:FDO) reported its fiscal second-quarter profit fell to $90.9 million, or 80 cents a share, from $140.1 million, or $1.21 a share, a year earlier. Revenue fell to $2.72 billion, from $2.89 billion a year earlier, the discount retailer said Thursday. Analysts had expected earnings of 90 cents a share on revenue of $2.77 billion, according to FactSet. Same-store sales were down 3.8% last quarter. “Our second quarter results did not meet our expectations,” said Chairman and CEO Howard Levine, noting that the holiday season proved particularly challenging. Family Dollar said it is closing about 370 under-performing stores. The retailer expects a per-share earnings range for the current quarter of $0.85 to $0.95, which excludes restructuring charges. For the full year, the firm expects an earnings per share range of $3.05 to $3.25. Shares in Family Dollar were down 1.8% in premarket trading.

DO I EVER TIRE OF BEING RIGHT?

I penned the paragraph below a couple weeks ago. Since then, Sears/Kmart has been announcing closings across the land. Today it is being confirmed that Radio Shack will be shuttering 500 more stores, after shuttering 500 last year. Only 6,000 more to go. This was so predictable, a BLS economist could have seen it coming. Of course, Jim Cramer says it’s a buy.

“Quarter after quarter there will be more announcements of store closings. Macys just announced the closing of 5 stores and firing of 2,500 retail workers. JC Penney just announced the closing of 33 stores and firing of 2,000 retail workers. Announcements are imminent from Sears, Radio Shack and a slew of other retailers who are beginning to see the writing on the wall. The vacancy rate will be rising in strip malls, power malls and regional malls, with the largest growing sector being ghost malls. Before long it will appear that SPACE AVAILABLE is the fastest growing retailer in America.” – Famous Retail Guru – Admin – The Retail Death Rattle – 1-14-14

One year ago I wrote an article called Disastrous Results, detailing the coming bankruptcy of Radio Shack.

The chickens are coming home to roost. There will be 500 more vacant shells in malls across America. Liquidation is in the foreseeable future. Book it Dano.

THE RETAIL DEATH RATTLE

“I was part of that strange race of people aptly described as spending their lives doing things they detest, to make money they don’t want, to buy things they don’t need, to impress people they don’t like.” ― Emile Gauvreau

If ever a chart provided unequivocal proof the economic recovery storyline is a fraud, the one below is the smoking gun. November and December retail sales account for 20% to 40% of annual retail sales for most retailers. The number of visits to retail stores has plummeted by 50% since 2010. Please note this was during a supposed economic recovery. Also note consumer spending accounts for 70% of GDP. Also note credit card debt outstanding is 7% lower than its level in 2010 and 16% below its peak in 2008. Retailers like J.C. Penney, Best Buy, Sears, Radio Shack and Barnes & Noble continue to report appalling sales and profit results, along with listings of store closings. Even the heavyweights like Wal-Mart and Target continue to report negative comp store sales. How can the government and mainstream media be reporting an economic recovery when the industry that accounts for 70% of GDP is in free fall? The answer is that 99% of America has not had an economic recovery. Only Bernanke’s 1% owner class have benefited from his QE/ZIRP induced stock market levitation.

Source: WSJ

The entire economic recovery storyline is a sham built upon easy money funneled by the Fed to the Too Big To Trust Wall Street banks so they can use their HFT supercomputers to drive the stock market higher, buy up the millions of homes they foreclosed upon to artificially drive up home prices, and generate profits through rigging commodity, currency, and bond markets, while reducing loan loss reserves because they are free to value their toxic assets at anything they please – compliments of the spineless nerds at the FASB. GDP has been artificially propped up by the Federal government through the magic of EBT cards, SSDI for the depressed and downtrodden, never ending extensions of unemployment benefits, billions in student loans to University of Phoenix prodigies, and subprime auto loans to deadbeats from the Government Motors financing arm – Ally Financial (85% owned by you the taxpayer). The country is being kept afloat on an ocean of debt and delusional belief in the power of central bankers to steer this ship through a sea of icebergs just below the surface.

The absolute collapse in retail visitor counts is the warning siren that this country is about to collide with the reality Americans have run out of time, money, jobs, and illusions. The most amazingly delusional aspect to the chart above is retailers continued to add 44 million square feet in 2013 to the almost 15 billion existing square feet of retail space in the U.S. That is approximately 47 square feet of retail space for every person in America. Retail CEOs are not the brightest bulbs in the sale bin, as exhibited by the CEO of Target and his gross malfeasance in protecting his customers’ personal financial information. Of course, the 44 million square feet added in 2013 is down 85% from the annual increases from 2000 through 2008. The exponential growth model, built upon a never ending flow of consumer credit and an endless supply of cheap fuel, has reached its limit of growth. The titans of Wall Street and their puppets in Washington D.C. have wrung every drop of faux wealth from the dying middle class. There are nothing left but withering carcasses and bleached bones.

The impact of this retail death spiral will be vast and far reaching. A few factoids will help you understand the coming calamity:

There are approximately 109,500 shopping centers in the United States ranging in size from the small convenience centers to the large super-regional malls.
There are in excess of 1 million retail establishments in the United States occupying 15 billion square feet of space and generating over $4.4 trillion of annual sales. This includes 8,700 department stores, 160,000 clothing & accessory stores, and 8,600 game stores.
U.S. shopping-center retail sales total more than $2.26 trillion, accounting for over half of all retail sales.
The U.S. shopping-center industry directly employed over 12 million people in 2010 and indirectly generated another 5.6 million jobs in support industries. Collectively, the industry accounted for 12.7% of total U.S. employment.
Total retail employment in 2012 totaled 14.9 million, lower than the 15.1 million employed in 2002.
For every 100 individuals directly employed at a U.S. regional shopping center, an additional 20 to 30 jobs are supported in the community due to multiplier effects.

The collapse in foot traffic to the 109,500 shopping centers that crisscross our suburban sprawl paradise of plenty is irreversible. No amount of marketing propaganda, 50% off sales, or hot new iGadgets is going to spur a dramatic turnaround. Quarter after quarter there will be more announcements of store closings. Macys just announced the closing of 5 stores and firing of 2,500 retail workers. JC Penney just announced the closing of 33 stores and firing of 2,000 retail workers. Announcements are imminent from Sears, Radio Shack and a slew of other retailers who are beginning to see the writing on the wall. The vacancy rate will be rising in strip malls, power malls and regional malls, with the largest growing sector being ghost malls. Before long it will appear that SPACE AVAILABLE is the fastest growing retailer in America.

The reason this death spiral cannot be reversed is simply a matter of arithmetic and demographics. While arrogant hubristic retail CEOs of public big box mega-retailers added 2.7 billion retail square feet to our already over saturated market, real median household income flat lined. The advancement in retail spending was attributable solely to the $1.1 trillion increase (68%) in consumer debt and the trillion dollars of home equity extracted from castles in the sky, that later crashed down to earth. Once the Wall Street created fraud collapsed and the waves of delusion subsided, retailers have been revealed to be swimming naked. Their relentless expansion, based on exponential growth, cannibalized itself, new store construction ground to a halt, sales and profits have declined, and the inevitable closing of thousands of stores has begun. With real median household income 8% lower than it was in 2008, the collapse in retail traffic is a rational reaction by the impoverished 99%. Americans are using their credit cards to pay their real estate taxes, income taxes, and monthly utilities, since their income is lower, and their living expenses rise relentlessly, thanks to Bernanke and his Fed created inflation.

The media mouthpieces for the establishment gloss over the fact average gasoline prices in 2013 were the second highest in history. The highest average price was in 2012 and the 3rd highest average price was in 2011. These prices are 150% higher than prices in the early 2000’s. This might not matter to the likes of Jamie Dimon and Jon Corzine, but for a middle class family with two parents working and making 7.5% less than they made in 2000, it has a dramatic impact on discretionary income. The fact oil prices have risen from $25 per barrel in 2003 to $100 per barrel today has not only impacted gas prices, but utility costs, food costs, and the price of any product that needs to be transported to your local Wally World. The outrageous rise in tuition prices has been aided and abetted by the Federal government and their doling out of loans so diploma mills like the University of Phoenix can bilk clueless dupes into thinking they are on their way to an exciting new career, while leaving them jobless in their parents’ basement with a loan payment for life.

The laughable jobs recovery touted by Obama, his sycophantic minions, paid off economist shills, and the discredited corporate legacy media can be viewed appropriately in the following two charts, that reveal the false storyline being peddled to the techno-narcissistic iGadget distracted masses. There are 247 million working age Americans between the ages of 18 and 64. Only 145 million of these people are employed. Of these employed, 19 million are working part-time and 9 million are self- employed. Another 20 million are employed by the government, producing nothing and being sustained by the few remaining producers with their tax dollars. The labor participation rate is the lowest it has been since women entered the workforce in large numbers during the 1980’s. We are back to levels seen during the booming Carter years. Those peddling the drivel about retiring Baby Boomers causing the decline in the labor participation rate are either math challenged or willfully ignorant because they are being paid to be so. Once you turn 65 you are no longer counted in the work force. The percentage of those over 55 in the workforce has risen dramatically to an all-time high, as the Me Generation never saved for retirement or saw their retirement savings obliterated in the Wall Street created 2008 financial implosion.

To understand the absolute idiocy of retail CEOs across the land one must parse the employment data back to 2000. In the year 2000 the working age population of the U.S. was 213 million and 136.9 million of them were working, a record level of 64.4% of the population. There were 70 million working age Americans not in the labor force. Fourteen years later the number of working age Americans is 247 million and only 144.6 million are working. The working age population has risen by 16% and the number of employed has risen by only 5.6%. That’s quite a success story. Of course, even though median household income is 7.5% lower than it was in 2000, the government expects you to believe that 22 million Americans voluntarily left the labor force because they no longer needed a job. While the number of employed grew by 5.6% over fourteen years, the number of people who left the workforce grew by 31.1%. Over this same time frame the mega-retailers that dominate the landscape added almost 3 billion square feet of selling space, a 25% increase. A critical thinking individual might wonder how this could possibly end well for the retail genius CEOs in glistening corporate office towers from coast to coast.

This entire materialistic orgy of consumerism has been sustained solely with debt peddled by the Wall Street banking syndicate. The average American consumer met their Waterloo in 2008. Bernanke’s mission was to save bankers, billionaires and politicians. It was not to save the working middle class. You’ve been sacrificed at the altar of the .1%. The 0% interest rates were for Jamie Dimon and Lloyd Blankfein. Your credit card interest rate remained between 13% and 21%. So, while you struggle to pay bills with your declining real income, the Wall Street bankers are again generating record profits and paying themselves record bonuses. Profits are so good, they can afford to pay tens of billions in fines for their criminal acts, and still be left with billions to divvy up among their non-prosecuted criminal executives.

Bernanke and his financial elite owners have been able to rig the markets to give the appearance of normalcy, but they cannot rig the demographic time bomb that will cause the death and destruction of our illusory retail paradigm. Demographics cannot be manipulated or altered by the government or mass media. The best they can do is ignore or lie about the facts. The life cycle of a human being is utterly predictable, along with their habits across time. Those under 25 years old have very little income, therefore they have very little spending. Once a job is attained and income levels rise, spending rises along with the increased income. As the person enters old age their income declines and spending on stuff declines rapidly. The media may be ignoring the fact that annual expenditures drop by 40% for those over 65 years old from the peak spending years of 45 to 54, but it doesn’t change the fact. They also cannot change the fact that 10,000 Americans will turn 65 every day for the next sixteen years. They also can’t change the fact the average Baby Boomer has less than $50,000 saved for retirement and is up to their grey eye brows in debt.

With over 15% of all 25 to 34 year olds living in their parents’ basement and those under 25 saddled with billions in student loan debt, the traditional increase in income and spending is DOA for the millennial generation. The hardest hit demographic on the job front during the 2008 through 2014 ongoing recession has been the 45 to 54 year olds in their peak earning and spending years. Combine these demographic developments and you’ve got a perfect storm for over-built retailers and their egotistical CEOs.

The media continues to peddle the storyline of on-line sales saving the ancient bricks and mortar retailers. Again, the talking head pundits are willfully ignoring basic math. On-line sales account for 6% of total retail sales. If a dying behemoth like JC Penney announces a 20% decline in same store sales and a 20% increase in on-line sales, their total change is still negative 17.6%. And they are still left with 1,100 decaying stores, 100,000 employees, lease payments, debt payments, maintenance costs, utility costs, inventory costs, and pension costs. Their future is so bright they gotta wear a toe tag.

The decades of mal-investment in retail stores was enabled by Greenspan, Bernanke, and their Federal Reserve brethren. Their easy money policies enabled Americans to live far beyond their true means through credit card debt, auto debt, mortgage debt, and home equity debt. This false illusion of wealth and foolish spending led mega-retailers to ignore facts and spread like locusts across the suburban countryside. The debt fueled orgy has run out of steam. All that is left is the largest mountain of debt in human history, a gutted and debt laden former middle class, and thousands of empty stores in future decaying ghost malls haunting the highways and byways of suburbia.

The implications of this long and winding road to ruin are far reaching. Store closings so far have only been a ripple compared to the tsunami coming to right size the industry for a future of declining spending. Over the next five to ten years, tens of thousands of stores will be shuttered. Companies like JC Penney, Sears and Radio Shack will go bankrupt and become historical footnotes. Considering retail employment is lower today than it was in 2002 before the massive retail expansion, the future will see in excess of 1 million retail workers lose their jobs. Bernanke and the Feds have allowed real estate mall owners to roll over non-performing loans and pretend they are generating enough rental income to cover their loan obligations. As more stores go dark, this little game of extend and pretend will come to an end. Real estate developers will be going belly-up and the banking sector will be taking huge losses again. I’m sure the remaining taxpayers will gladly bailout Wall Street again. The facts are not debatable. They can be ignored by the politicians, Ivy League economists, media talking heads, and the willfully ignorant masses, but they do not cease to exist.

“Facts do not cease to exist because they are ignored.” – Aldous Huxley

SHOCKING NEWS

Who coulda predicted this development? I hate to tell the new CEO, who was the old CEO, before he was replaced by another CEO, that 33 stores ain’t gonna cut it. He should have added a zero to the 33. That would be their only hope. This piece of shit is going down in flames.

The Wall Street shysters will be telling you to buy the stock tomorrow on this wonderful news, just like they told you to buy it at $40 a few years ago.

Next up. Sears will be announcing they are closing 50 to 100 stores as they reposition themselves for long term growth. And the beat goes on.

Ghost Malls get spookier by the day.

The Blistering Recovery Continues: Week After Macy’s, JC Penney Fires 2000, Closes 33 Stores

Submitted by Tyler Durden on 01/15/2014 16:14 -05000

A week ago, Macy’s fired 2500 and announced the closure of five stores. Moments ago, the company which we have been warnings since late 2012 is a meltin ice cube that ends with bankruptcy, JCPenney, which a week ago provided the following glib summary “JCPenney reported today that the Company is pleased with its performance for the holiday period“, turns out was merely joking and just echoed the Macy’s sentiment, announcing the termination of some 2,000 jobs and the closure of 33 stores.

JCPenney today announced that as part of its turnaround efforts, the Company will be closing 33 underperforming stores across the country in order to focus its resources on the Company`s highest potential growth opportunities.

These actions are expected to result in an annual cost savings of approximately $65 million, beginning in 2014. In connection with this initiative, the Company expects to incur estimated pre-tax charges of approximately $26 million in the fourth quarter of fiscal 2013 and approximately $17 million in future periods.

Remaining inventory in the affected stores will be sold over the next several months, with final closings expected to be complete by early May. The closings will result in the elimination of approximately 2,000 positions. Eligible associates who do not remain with the Company will receive separation benefits packages. Meanwhile, the Company is continuing its plans to open a new store location later this year at the Gateway II development in Brooklyn, N.Y.

“As we continue to progress toward long-term profitable growth, it is necessary to reexamine the financial performance of our store portfolio and adjust our national footprint accordingly,” said Myron E. (Mike) Ullman, III, chief executive officer of JCPenney. “While it`s always difficult to make a business decision that impacts our valued customers and associates, this important step addresses a strategic priority to improve the profitability of our stores and position JCPenney for future success.”

What can one say but: this is just the kind of recovery that justifies an S&P500 at all time highs.

Investors initially cheered… but now not so much…

ONLY 2,400 BIG BOX STORES TO CLOSE IN NEXT FEW YEARS

Nothing like a little reality on a Wednesday afternoon. Below is a list of the worst of the worst retailers in the U.S. Hysterically, there are multiple articles about JC Penney this morning and the surge in their stock price yesterday because their dumbass CEO has announced a major change in strategy. Drum roll please. He is going back to having fake sales. The idiots who call themselves financial analysts immediately expounded upon the brilliance of this move. After losing $1 billion of business in one year, this will surely turn the ship back on course.

So solly. The list below, along with the three other failed retailers – Gamestop, Office Max and Radio Shack will be closing thousands of stores in the near future. Just think of all the benefits this will provide. More ghost malls across America. It will do wonders for the Space Available sign manufacturers. Maybe some new retail concepts can gain a foothold – Soup Kitchens R Us, Used Body Parts Thrift Store, or a cafe catering to senior citizens with your choice of cat or dog food.

It should really test the accounting fraud skills of mall owners, property developers, and our friendly Wall Street bankers as rental income dries up and loan payments on vacant malls become a little challenging. I’m sure Bernanke can convince the FASB to let the banks convert all commercial loans to balloon payment loans with a 50 year term. Therefore, all will be well. No need for cashflow or tenants. I should work for the government.

There should be some great going out of business sales. I’m looking forward to it.

Retailers That Will Close the Most Stores

by 24/7 Wall St. | January 29, 2013 at 1:24 PM | Economy, General, Shopping

(AP Photo/Dave Martin)

By Douglas A. McIntyre, Samuel Weigley, Alexander E.M. Hess and Michael B. Sauter, 24/7 Wall St.

It is the time of year again, when America’s largest retailers release those critical holiday season figures and disclose their annual sales. A review of these numbers tells us a great deal about how most of the companies will do in the upcoming year. And while successful retailers in 2012 may add stores this year, those that have performed very poorly may have to cut locations during 2013 to improve margins or reverse losses.

For many retailers, the sales situation is so bad that it is not a question of whether they will cut stores, but when and how many. Most recently, Barnes & Noble Inc. (NYSE: BKS) decided it had too many stores to maintain profits. Its CEO recently said he plans to close as many as a third of the company’s locations.

Several of America’s largest retailers have been battered for years. Most have been undermined by a combination of e-commerce competition, often from Amazon.com Inc. (NASDAQ: AMZN) and more successful retailers in the same areas. Borders and Circuit City are two of the best examples of retailers that were destroyed by larger bricks-and-mortar competition and consumers transitioning to online shopping. These large, badly damaged retailers could not possibly keep their stores open.

24/7 Wall St. reviewed the weakest large U.S. retailers and picked those that likely will not be profitable next year if they keep their current location counts. 24/7 analyzed the retailers’ store counts, recent financial data, online presences, prospects against direct competitors and precedents set by other large retailers that have downsized by shuttering locations. We then forecast how many stores each retailer will have to close this year to sharply increase its prospects financially, even if some of those location closings do not occur for several years. These forecasts were based on drops in same-store sales, drops in revenue, a review of direct competitors, Internet sales and the size of cuts at retailers in the same sector, if those were available.

5. Barnes & Noble
> Forecast store closings: 190 to 240, per company comments
> Number of U.S. stores: 689
> One-year stock performance: 8.95%

The move by customers away from print books toward digital books has hurt Barnes & Noble Inc. (NYSE: BKS). Same-store sales during the nine-week holiday season fell by 8.2% year-over-year. The bookseller has tried to offset the declines in physical book sales with its Nook e-book reader device, but sales of that device fell 13% compared to the previous year. The company already has begun cutting down the number of its stores in the past several years. In a recent interview with the Wall Street Journal, the head of the retail group at Barnes & Noble said he expected the company to have just 450 to 500 retail stores in 10 years.

4. Office Depot
> Forecast store closings: 125 to 150
> Number of U.S. stores: 1,114
> One-year stock performance: 50.7%

Office Depot Inc.’s (NYSE: ODP) troubles date back to years of competition against OfficeMax Inc. (NYSE: OMX) and Staples Inc. (NASDAQ: SPLS), as well as big-box retailers like Walmart. All three stores were dealt a blow from reduced business activity during the recession, as well as increased popularity of online retailers such as Amazon. The company’s North American division reported an operating loss of $21 million in the third quarter of 2012. Office Depot plans to relocate or downsize as many as 500 locations and close at least 20 stores. In the third quarter of 2012, the company closed four stores in the United States, and same-store sales were down by 4% year-over-year.

3. J.C. Penney
> Forecast store closings: 300 to 350
> Number of U.S. stores: 1,100
> One-year stock performance: -53.6%

J.C. Penney has gone through a rough stretch recently. In the most recent quarter, same-store sales fell by 26.1% compared to the year-ago period. Even Internet sales, which are increasing significantly across the retail sector, have taken a turn for the worst, falling 37.3% in the third quarter, compared to the prior year. J.C. Penney sales have taken a turn for the worst since former Apple Inc. (NASDAQ: AAPL) retail chief Ron Johnson took the helm at the company. Johnson’s plan, among others, has been to wean customers off of heavy discounting and simply give customers low prices. However, retail strategists and analysts have argued that Johnson’s plans have created confusion among customers and has been a further setback to any potential turnaround.

2. Sears Holding Corp.
> Forecast store closings: Kmart 175 to 225, Sears 100 to 125
> Number of U.S. stores: 2,118
> One-year stock performance: 8.8%

Both Sears and Kmart have been going down the tubes for a long-time, steadily losing their middle-income shoppers to retailers such as Wal-Mart Stores Inc. (NYSE: WMT) and Target Corp. (NYSE: TGT). Sears Holdings Corp.’s (NASDAQ: SHLD) same-store sales have declined for six years. In the most recent year, same-store sales at the namesake franchise fell by 1.6% and at Kmart by 3.7%, compared to the year-ago period. The company is already in the process of downsizing its brick-and-mortar presence. In 2012, Sears announced it was shutting 172 stores. CEO Lou D’Ambrosio is leaving the company in February, to be replaced by chairman and hedge-fund manager Edward Lampert. Lampert has minimal operating experience in retail management.

1. Best Buy
> Forecast store closings: 200 to 250
> Number of U.S. stores:1,056
> One-year stock performance: -36.8%

The holiday season was rough for Best Buy Co. Inc. (NYSE: BBY). Same-store sales declined by 1.4% year-over-year, with international stores posting a 6.4% decline while U.S. same-store sales were flat. Companywide, the electronics retailer reported that holiday revenue had declined to $12.8 billion from $12.9 billion the year before. In the most recent completed quarter, during which same-store sales declined 4.3%, the company reported a loss of $0.04 per share. Best Buy has been plagued by customers “showrooming” — looking at products in the store and then purchasing them online — in recent years. Speculation persists that former chairman and founder Richard Schulze may buy out the company.

To see the full list, visit 24/7 Wall St.

JC PENNEY COMING IN FOR A LANDING

I got my glossy JC Penney ad in my newspaper this morning. I threw it out, just like millions of Americans do every day. I have previously detailed the downward spiral of JC Penney in previous posts. They will join the ranks of that great retailer Montgomery Ward in the retail graveyard in the not too distant future. Their delusional egomaniacal, former Apple executive, CEO is driving the company into bankruptcy at a breakneck pace.

http://www.theburningplatform.com/?p=38725

http://www.theburningplatform.com/?p=34521

The brilliant Wall Street shysters are “shocked” with the results reported this morning. These paid shills will come out and recommend buying this piece of shit because the CEO has a brilliant plan. The free haircuts on Sunday are going to save the day. Here is a link to their horrific results and my assessment:

http://finance.yahoo.com/news/j-c-penney-company-inc-120000473.html

They lost $211 million in one quarter and have lost $734 through nine months.
Their sales declined by a mind boggling 26.6% versus last year. That is a $1.1 billion sales decline versus the prior year. Picture an airplane headed straight into the ground at 600 miles per hour.
Their gross margin collapsed from 37.4% to 32.5% as NO ONE is buying their shit. Imagine their Christmas season.
They are now selling off assets to generate cash to survive. These idiots were buying back stock, just like Kohls, just over a year ago.
This company employees 159,000 people. It is and will be laying off thousands. Thousands more will see their hours cut.
The balance sheet will reveal when this stinking carp goes belly up. They have burned through $560 million of cash even after selling off $279 million of assets to raise cash. They have $525 million left and their operations are deteriorating rapidly. At this rate of burn, they will surely be done during 2013.
The only thing saving them now is the fact that they don’t have debt due in the next year and they have reduced their inventory by $1 billion. Don’t look for a big selection at JC Penney during the holiday season.
With their free cash flow declining by $1.3 billion in nine months, they are in a death spiral.

The only way for the moron running this company to save it would be to reverse course on his No Sales mantra and to close his 20% worst performing stores immediately. His hubris and ego will not allow him to do this. He will go on his conference call and tell the Wall Street douchebags that his vision will eventually achieve success. In the near future you will see an announcement that JC Penney has declared bankruptcy, will be laying off 75,000 people and closing 600 stores. Book it.

ARE YOU SEEING WHAT I’M SEEING?

Is it just me, or are the signs of consumer collapse as clear as a Lowes parking lot on a Saturday afternoon? Sometimes I wonder if I’m just seeing the world through my pessimistic lens, skewing my point of view. My daily commute through West Philadelphia is not very enlightening, as the squalor, filth and lack of legal commerce remain consistent from year to year. This community is sustained by taxpayer subsidized low income housing, taxpayer subsidized food stamps, welfare payments, and illegal drug dealing. The dependency attitude, lifestyles of slothfulness and total lack of commerce has remained constant for decades in West Philly. It is on the weekends, cruising around a once thriving suburbia, where you perceive the persistent deterioration and decay of our debt fixated consumer spending based society.

The last two weekends I’ve needed to travel the highways of Montgomery County, PA going to a family party and purchasing a garbage disposal for my sink at my local Lowes store. Montgomery County is the typical white upper middle class suburb, with tracts of McMansions dotting the landscape. The population of 800,000 is spread over a 500 square mile area. Over 81% of the population is white, with the 9% black population confined to the urban enclaves of Norristown and Pottstown.

The median age is 38 and the median household income is $75,000, 50% above the national average. The employers are well diversified with an even distribution between education, health care, manufacturing, retail, professional services, finance and real estate. The median home price is $300,000, also 50% above the national average. The county leans Democrat, with Obama winning 60% of the vote in 2008. The 300,000 households were occupied by college educated white collar professionals. From a strictly demographic standpoint, Montgomery County appears to be a prosperous flourishing community where the residents are living lives of relative affluence. But, if you look closer and connect the dots, you see fissures in this façade of affluence that spread more expansively by the day. The cheap oil based, automobile dependent, mall centric, suburban sprawl, sanctuary of consumerism lifestyle is showing distinct signs of erosion. The clues are there for all to see and portend a bleak future for those mentally trapped in the delusions of a debt dependent suburban oasis of retail outlets, chain restaurants, office parks and enclaves of cookie cutter McMansions. An unsustainable paradigm can’t be sustained.

The first weekend had me driving along Ridge Pike, from Collegeville to Pottstown. Ridge Pike is a meandering two lane road that extends from Philadelphia, winds through Conshohocken, Plymouth Meeting, Norristown, past Ursinus College in Collegeville, to the farthest reaches of Montgomery County, at least 50 miles in length. It served as a main artery prior to the introduction of the interstates and superhighways that now connect the larger cities in eastern PA. Except for morning and evening rush hours, this road is fairly sedate. Like many primary routes in suburbia, the landscape is engulfed by strip malls, gas stations, automobile dealerships, office buildings, fast food joints, once thriving manufacturing facilities sitting vacant and older homes that preceded the proliferation of cookie cutter communities that now dominate what was once farmland.

Telltale Signs

I should probably be keeping my eyes on the road, but I can’t help but notice the telltale signs of an economic system gone haywire. As you drive along, the number of For Sale signs in front of homes stands out. When you consider how bad the housing market has been, the 40% decline in national home prices since 2007, the 30% of home dwellers underwater on their mortgage, and declining household income, you realize how desperate a home seller must be to try and unload a home in this market. The reality of the number of For Sale signs does not match the rhetoric coming from the NAR, government mouthpieces, CNBC pundits, and other housing recovery shills about record low inventory and home price increases.

The Federal Reserve/Wall Street/U.S. Treasury charade of foreclosure delaying tactics and selling thousands of properties in bulk to their crony capitalist buddies at a discount is designed to misinform the public. My local paper lists foreclosures in the community every Monday morning. In 2009 it would extend for four full pages. Today, it still extends four full pages. The fact that Wall Street bankers have criminally forged mortgage documents, people are living in houses for two years without making mortgage payments, and the Federal Government backing 97% of all mortgages while encouraging 3.5% down financing does not constitute a true housing recovery. Show me the housing recovery in these charts.

Existing home sales are at 1998 levels, with 45 million more people living in the country today.

New single family homes under construction are below levels in 1969, when there were 112 million less people in the country.

Another observation that can be made as you cruise through this suburban mecca of malaise is the overall decay of the infrastructure, appearances and disinterest or inability to maintain properties. The roadways are potholed with fading traffic lines, utility poles leaning and rotting, and signage corroding and antiquated. Houses are missing roof tiles, siding is cracked, gutters astray, porches sagging, windows cracked, a paint brush hasn’t been utilized in decades, and yards are inundated with debris and weeds. Not every house looks this way, but far more than you would think when viewing the overall demographics for Montgomery County. You wonder how many number among the 10 million vacant houses in the country today. The number of dilapidated run down properties paints a picture of the silent, barely perceptible Depression that grips the country today. With such little sense of community in the suburbs, most people don’t even know their neighbors. With the electronic transfer of food stamps, unemployment compensation, and other welfare benefits you would never know that your neighbor is unemployed and hasn’t made the mortgage payment on his house in 30 months. The corporate fascist ruling plutocracy uses their propaganda mouthpieces in the mainstream corporate media and government agency drones to misinform and obscure the truth, but the data and anecdotal observational evidence reveal the true nature of our societal implosion.

A report by the Census Bureau this past week inadvertently reveals data that confirms my observations on the roadways of my suburban existence. Annual household income fell in 2011 for the fourth straight year, to an inflation-adjusted $50,054. The median income — meaning half earned more, half less — now stands 8.9% lower than the all-time peak of $54,932 in 1999. It is far worse than even that dreadful result. Real median household income is lower than it was in 1989. When you understand that real household income hasn’t risen in 23 years, you can connect the dots with the decay and deterioration of properties in suburbia. A vast swath of Americans cannot afford to maintain their residences. If the choice is feeding your kids and keeping the heat on versus repairing the porch, replacing the windows or getting a new roof, the only option is survival.

All races have seen their income fall, with educational achievement reflected in the much higher incomes of Whites and Asians. It is interesting to note that after a 45 year War on Poverty the median household income for black families is only up 19% since 1968.

Now for the really bad news. Any critical thinking person should realize the Federal Government has been systematically under-reporting inflation since the early 1980’s in an effort to obscure the fact they are debasing the currency and methodically destroying the lives of middle class Americans. If inflation was calculated exactly as it was in 1980, the GDP figures would be substantially lower and inflation would be reported 5% higher than it is today. Faking the numbers does not change reality, only the perception of reality. Calculating real median household income with the true level of inflation exposes the true picture for middle class America. Real median household income is lower than it was in 1970, just prior to Nixon closing the gold window and unleashing the full fury of a Federal Reserve able to print fiat currency and politicians to promise the earth, moon and the sun to voters. With incomes not rising over the last four decades is it any wonder many of our 115 million households slowly rot and decay from within like an old diseased oak tree. The slightest gust of wind can lead to disaster.

Eliminating the last remnants of fiscal discipline on bankers and politicians in 1971 accomplished the desired result of enriching the top 0.1% while leaving the bottom 90% in debt and desolation. The Wall Street debt peddlers, Military Industrial arms dealers, and job destroying corporate goliaths have reaped the benefits of financialization (money printing) while shoveling the costs, their gambling losses, trillions of consumer debt, and relentless inflation upon the working tax paying middle class. The creation of the Federal Reserve and implementation of the individual income tax in 1913, along with leaving the gold standard has rewarded the cabal of private banking interests who have captured our economic and political systems with obscene levels of wealth, while senior citizens are left with no interest earnings ($400 billion per year has been absconded from savers and doled out to bankers since 2008 by Ben Bernanke) and the middle class has gone decades seeing their earnings stagnate and their purchasing power fall precipitously.

The facts exposed in the chart above didn’t happen by accident. The system has been rigged by those in power to enrich them, while impoverishing the masses. When you gain control over the issuance of currency, issuance of debt, tax system, political system and legal apparatus, you’ve essentially hijacked the country and can funnel all the benefits to yourself and costs to the math challenged, government educated, brainwashed dupes, known as the masses. But there is a problem for the 0.1%. Their sociopathic personalities never allow them to stop plundering and preying upon the sheep. They have left nothing but carcasses of the once proud hard working middle class across the country side. There are only so many Lear jets, estates in the Hamptons, Jaguars, and Rolexes the 0.1% can buy. There are only 152,000 of them. Their sociopathic looting and pillaging of the national wealth has destroyed the host. When 90% of the population can barely subsist, collapse and revolution beckon.

Extend, Pretend & Depend

As I drove further along Ridge Pike we passed the endless monuments to our spiral into the depths of materialism, consumerism, and the illusion that goods purchased on credit represented true wealth. Mile after mile of strip malls, restaurants, gas stations, and office buildings rolled by my window. Anyone who lives in the suburbs knows what I’m talking about. You can’t travel three miles in any direction without passing a Dunkin Donuts, KFC, McDonalds, Subway, 7-11, Dairy Queen, Supercuts, Jiffy Lube or Exxon Station. The proliferation of office parks to accommodate the millions of paper pushers that make our service economy hum has been unprecedented in human history. Never have so many done so little in so many places. Everyone knows what a standard American strip mall consists of – a pizza place, a Chinese takeout, beer store, a tanning, salon, a weight loss center, a nail salon, a Curves, karate studio, Gamestop, Radioshack, Dollar Store, H&R Block, and a debt counseling service. They are a reflection of who we’ve become – an obese drunken species with excessive narcissistic tendencies that prefers to play video games while texting on our iGadgets as our debt financed lifestyles ultimately require professional financial assistance.

What you can’t ignore today is the number of vacant storefronts in these strip malls and the overwhelming number of SPACE AVAILABLE, FOR LEASE, and FOR RENT signs that proliferate in front of these dying testaments to an unsustainable economic system based upon debt fueled consumer spending and infinite growth assumptions. The booming sign manufacturer is surely based in China. The officially reported national vacancy rates of 11% are already at record highs, but anyone with two eyes knows these self-reported numbers are a fraud. Vacancy rates based on my observations are closer to 30%. This is part of the extend and pretend strategy that has been implemented by Ben Bernanke, Tim Geithner, the FASB, and the Wall Street banking cabal. The fraud and false storyline of a commercial real estate recovery is evident to anyone willing to think critically. The incriminating data is provided by the Federal Reserve in their Quarterly Delinquency Report.

The last commercial real estate crisis occurred in 1991. Mall vacancy rates were at levels consistent with today.

The current reported office vacancy rates of 17.5% are only slightly below the 19% levels of 1991.

As reported by the Federal Reserve, delinquency rates on commercial real estate loans in 1991 were 12%, leading to major losses among the banks that made those imprudent loans. Amazingly, after the greatest financial collapse in history, delinquency rates on commercial loans supposedly peaked at 8.8% in the 2^nd quarter of 2010 and have now miraculously plummeted to pre-collapse levels of 4.9%. This is while residential loan delinquencies have resumed their upward trajectory, the number of employed Americans has fallen by 414,000 in the last two months, 9 million Americans have left the labor force since 2008, and vacancy rates are at or near all-time highs. This doesn’t pass the smell test. The Federal Reserve, owned and controlled by the Wall Street, instructed these banks to extend all commercial real estate loans, pretend they will be paid, and value them on their books at 100% of the original loan amount. Real estate developers pretend they are collecting rent from non-existent tenants, Wall Street banks pretend they are being paid by the developers, and their highly compensated public accounting firm pretends the loans aren’t really delinquent. Again, the purpose of this scam is to shield the Wall Street bankers from accepting the losses from their reckless behavior. Ben rewards them with risk free income on their deposits, propped up by mark to fantasy accounting, while they reward themselves with billions in bonuses for a job well done. The master plan requires an eventual real recovery that isn’t going to happen. Press releases and fake data do not change the reality on the ground.

I have two strip malls within three miles of my house that opened in 1990. When I moved to the area in 1995, they were 100% occupied and a vital part of the community. The closest center has since lost its Genuardi grocery store, Sears Hardware, Blockbuster, Donatos, Sears Optical, Hollywood Tans, hair salon, pizza pub and a local book store. It is essentially a ghost mall, with two banks, a couple chain restaurants and empty parking spaces. The other strip mall lost its grocery store anchor and sporting goods store. This has happened in an outwardly prosperous community. The reality is the apparent prosperity is a sham. The entire tottering edifice of housing, autos, and retail has been sustained by ever increasing levels of debt for the last thirty years and the American consumer has hit the wall. From 1950 through the early 1980s, when the working middle class saw their standard of living rise, personal consumption expenditures accounted for between 60% and 65% of GDP. Over the last thirty years consumption has relentlessly grown as a percentage of GDP to its current level of 71%, higher than before the 2008 collapse.

If the consumption had been driven by wage increases, then this trend would not have been a problem. But, we already know real median household income is lower than it was in 1970. The thirty years of delusion were financed with debt – peddled, hawked, marketed, and pushed by the drug dealers on Wall Street. The American people got hooked on debt and still have not kicked the habit. The decline in household debt since 2008 is solely due to the Wall Street banks writing off $800 billion of mortgage, credit card, and auto loan debt and transferring the cost to the already drowning American taxpayer.

The powers that be are desperately attempting to keep this unsustainable, dysfunctional debt choked scheme from disintegrating by doling out more subprime auto debt, subprime student loan debt, low down payment mortgages, and good old credit card debt. It won’t work. The consumer is tapped out. Last week’s horrific retail sales report for August confirmed this fact. Declining household income and rising costs for energy, food, clothing, tuition, taxes, health insurance, and the other things needed to survive in the real world, have broken the spirit of Middle America. The protracted implosion of our consumer society has only just begun. There are thousands of retail outlets to be closed, hundreds of thousands of jobs to be eliminated, thousands of malls to be demolished, and billions of loan losses to be incurred by the criminal Wall Street banks.

The Faces of Failure & Futility

My fourteen years working in key positions for big box retailer IKEA has made me particularly observant of the hubris and foolishness of the big chain stores that dominate the retail landscape. There are 1.1 million retail establishments in the United States, but the top 25 mega-store national chains account for 25% of all the retail sales in the country. The top 100 retailers operate 243,000 stores and account for approximately $1.6 trillion in sales, or 36% of all the retail sales in the country. Their misconceived strategic plans assumed 5% same store growth for eternity, economic growth of 3% per year for eternity, a rising market share, and ignorance of the possible plans of their competitors. They believed they could saturate a market without over cannibalizing their existing stores. Wal-Mart, Target, Best Buy, Home Depot and Lowes have all hit the limits of profitable expansion. Each incremental store in a market results in lower profits.

My trip to my local Lowes last weekend gave me a glimpse into a future of failure and futility. Until 2009, I had four choices of Lowes within 15 miles of my house. There was a store 8 miles east, 12 miles west, 15 miles north, and 15 miles south of my house. In an act of supreme hubris, Lowes opened a store smack in the middle of these four stores, four miles from my house. The Hatfield store opened in early 2009 and I wrote an article detailing how Lowes was about to ruin their profitability in Montgomery County. It just so happens that I meet a couple of my old real estate buddies from IKEA at a local pub every few months. In 2009 one of them had a real estate position with Lowes and we had a spirited discussion about the prospects for the Lowes Hatfield store. He assured me it would be a huge success. I insisted it would be a dud and would crush the profitability of the market by cannibalizing the other four stores. We met at that same pub a few months ago. Lowes had laid him off and he admitted to me the Hatfield store was a disaster.

I pulled into the Lowes parking lot at 11:30 am on a Saturday. Big Box retailers do 50% of their business on the weekend. The busiest time frame is from 11:00 am to 2:00 pm on Saturday. Big box retailers build enough parking spots to handle this peak period. The 120,000 square feet Hatfield Lowes has approximately 1,000 parking spaces. I pulled into the spot closest to the entrance during their supposed peak period. There were about 70 cars in the parking lot, with most probably owned by Lowes workers. It is a pleasure to shop in this store, with wide open aisles, and an employee to customer ratio of four to one. The store has 14 checkout lanes and at peak period on a Saturday, there was ONE checkout lane open, with no lines. This is a corporate profit disaster in the making, but the human tragedy far overrides the declining profits of this mega-retailer.

As you walk around this museum of tools and toilets you notice the looks on the faces of the workers. These aren’t the tattooed, face pierced freaks you find in many retail establishments these days. They are my neighbors. They are the beaten down middle class. They are the middle aged professionals who got cast aside by the mega-corporations in the name of efficiency, outsourcing, right sizing, stock buybacks, and executive stock options. The irony of this situation is lost on those who have gutted the American middle class. When you look into the eyes of these people, you see sadness, confusion and embarrassment. They know they can do more. They want to do more. They know they’ve been screwed, but they aren’t sure who to blame. They were once the very customers propelling Lowes’ growth, buying new kitchens, appliances, and power tools. Now they can’t afford a can of paint on their $10 per hour, no benefit retail careers. As depressing as this portrait appears, it is about to get worse.

This Lowes will be shut down and boarded up within the next two years. The parking lot will become a weed infested eyesore occupied by 14 year old skateboarders. One hundred and fifty already down on their luck neighbors will lose their jobs, the township will have a gaping hole in their tax revenue, and the CEO of Lowes will receive a $50 million bonus for his foresight in announcing the closing of 100 stores that he had opened five years before. This exact scenario will play out across suburbia, as our unsustainable system comes undone. Our future path will parallel the course of the labor participation rate. Just as the 9 million Americans who have “left” the labor force since 2008 did not willfully make that choice, the debt burdened American consumer will be dragged kicking and screaming into the new reality of a dramatically reduced standard of living.

Connecting the dots between my anecdotal observations of suburbia and a critical review of the true non-manipulated data bestows me with a not optimistic outlook for the coming decade. Is what I’m seeing just the view of a pessimist, or are you seeing the same thing?

A few powerful men have hijacked our economic, financial and political structure. They aren’t socialists or capitalists. They’re criminals. They created the culture of materialism, greed and debt, sustained by prodigious levels of media propaganda. Our culture has been led to believe that debt financed consumption over morality and justice is the path to success. In reality, we’ve condemned ourselves to a slow painful death spiral of debasement and despair.

“A culture that does not grasp the vital interplay between morality and power, which mistakes management techniques for wisdom, and fails to understand that the measure of a civilization is its compassion, not its speed or ability to consume, condemns itself to death.” – Chris Hedges

SEARS – I TOLD YOU SO

Anyone remember my SEARS = TOAST post from May of this year? Here is a snippet:

Jesus Christ himself couldn’t save Sears. Has anyone on TBP actually bought anything at a Sears/Kmart in the last five years? They are the worst run retailer in America. They are dead and don’t even know it. These morons have added 247 new stores since 2006 but have managed to decrease their annual sales by $10 billion. Eddie Lampert is truly a retail genius. Over the next five years you will see a battle of retail zombies. Every big box retailer is part of the walking dead.

Sears will be the first victim and the stronger zombies – Home Depot, Lowes, and Wal-Mart will destroy them by underpricing appliances and tearing their heart out. Target, Kohls, and Wal-Mart already destroyed their apparel and general merchandise business.

A forward thinking realist would take a look at his 4,038 stores and close the 1,000 worst performing stores and try to conserve cash for the rough years ahead. They will not do this. They will go out in a blaze of glory with the biggest retail bankruptcy in history. There will be 4,038 rat infested vacant hulks rotting in our communities for decades.

You know I hate to tell people I told them so, but after yesterday I’m afraid I have to do it again. The demise of Sears is baked in the cake. Remember the stories in the MSM about Eddie Lambert being the new Warren Buffett. They were right. Buffet and Lambert have both proven to be dumbasses. Buffet’s brilliant investments in Goldman Sachs, GE and Bank of America have all sucked.

Eddie Lambert bought K-Mart and Sears as asset plays. One problem – the asset values of the properties have been cut in half. The fact that Sears and K-Mart are the worst managed retailers in America hasn’t helped. Sears started the year with $1.3 billion in cash and has burned through $600 billion in twelve months. This Lambert is a fucking genius. He is butt brothers with Jimmy Cramer. They worked together at where else but – GOLDMAN “THE VAMPIRE SQUID” SACHS. Cramer has been pumping this stock for years. Let’s assess his brilliance as an investment guru.

The stock traded at $192 per share in early 2007. Jim Cramer rated it a buy at this level. Today it trades at $34 a share. That is a NEGATIVE 82% return in just under five years. That is about par for the course for Jim Cramer. It traded at $95 earlier this year. It dropped 27% yesterday alone.

Here’s the deal. These bozos opened 247 new stores since 2006 and now they announced they are closing 120 stores. That is a piss in the ocean. If they really got serious and closed their 1,000 worst stores, they would have a chance to survive. But the ego of Eddie Lambert will not allow that decision to happen. He thinks he is smart. He’s a graduate of Goldman University for Christ’s sake. His reluctance to accept the facts will result in the bankruptcy of this piece of shit retailer and will leave the rotting carcasses of 4,000 rat infested hulks across suburbia. This stock is going to zero.

Thanksgiving Day Massacre: Sears Slaughtered On Collapsing Margins, To Shutter Hundreds Of Stores, Provides Revolver Update

Submitted by Tyler Durden on 12/27/2011 06:24 -0500

That retailer Sears, aka K-Mart, just preannounced what can only be described as catastrophic Q4 results should not be a surprise to anyone: after all we have been warning ever since the “record” thanksgiving holiday that when you literally dump merchandize at stunning losses, losses will, stunningly, follow. Sure enough enter Sears. What we, however, are ourselves stunned by is that as part of its preannouncement, Sears has decided it would be prudent to provide an update on its credit facility status as well as availability. As a reminder to anyone and everyone – there is no more sure way of committing corporate suicide than openly inviting the bear raid which always appears whenever the words “revolving credit facility” and “availability” appear in the same press release. Just recall MF Global. And here, as there, we expect shorting to death to commence in 5…4…3…

From Sears:

Sears Holdings Corporation (“Holdings,” “we,” “us,” “our,” or the “Company”) (Nasdaq: SHLD – News) today is providing an update on its quarter-to-date performance and planned actions to improve and accelerate the transformation of its business.

Comparable store sales for the eight-week (“QTD”) and year-to-date (“YTD”) periods ended December 25, 2011 for its Kmart and Sears stores are as follows:

K-Mart

QTD -4.4%

YTD -1.8%

Sears Domestic

QTD -6.0%

YTD -3.3%

Total

QTD -5.2%

YTD -2.6%

Kmart’s quarter-to-date comparable store sales decline reflects decreases in the consumer electronics and apparel categories and lower layaway sales. Sears Domestic’s quarter-to-date sales decline was primarily driven by the consumer electronics and home appliance categories, with more than half of the decline in Sears Domestic occurring in consumer electronics. Sears apparel sales were flat and Lands’ End in Sears stores was up mid-single digits.

The combination of lower sales and continued margin pressure coupled with expense increases has led to a decline in our Adjusted EBITDA. Accordingly, we expect that our fourth quarter consolidated Adjusted EBITDA will be less than half of last year’s amount. For reference, last year we generated $933 million of Adjusted EBITDA in the fourth quarter ( $795 million domestically and $138 million in Canada ).

Due to our performance in 2011 we expect that we will record in the fourth quarter a non-cash charge related to a valuation allowance on certain deferred tax assets of $1.6 to $1.8 billion . Although a valuation adjustment is recognized on these deferred tax assets, no economic loss has occurred as the underlying net operating loss carryforwards and other tax benefits remain available to reduce future taxes to the extent income is generated. Further, we may recognize in the fourth quarter an impairment charge on some goodwill balances for as much as $0.6 billion . These charges would be non-cash and combined are estimated to be between $1.6 and $2.4 billion .

“Given our performance and the difficult economic environment, especially for big-ticket items, we intend to implement a series of actions to reduce on-going expenses, adjust our asset base, and accelerate the transformation of our business model. These actions will better enable us to focus our investments on serving our customers and members through integrated retail – at the store, online and in the home,” said Chief Executive Officer Lou D’Ambrosio. Specific actions which we plan to take include:

Close 100 to 120 Kmart and Sears Full-line stores. We expect these store closures to generate $140 to $170 million of cash as the net inventory in these stores is sold and we expect to generate additional cash proceeds from the sale or sublease of the related real estate. Further, we intend to optimize the space allocation based on category performance in certain stores. Final determination of the stores to be closed has not yet been made. The list of stores closing will be posted at www.searsmedia.com when final determination is made.
Excluding the effect of store closures, we currently expect to reduce 2012 peak domestic inventory by $300 million from the 2011 level of $10.2 billion at the end of the third quarter as a result of cost decreases in apparel, tighter buys and a lower inventory position at the beginning of the fiscal year.
Focus on improving gross profit dollars through better inventory management and more targeted pricing and promotion.
Reduce our fixed costs by $100 to $200 million .

In addition to the specific store closures listed above, we will carefully evaluate store performance going forward and act opportunistically to recognize value from poor performing stores as circumstances allow. While our past practice has been to keep marginally performing stores open while we worked to improve their performance, we no longer believe that to be the appropriate action in this environment. We intend to accentuate our focus and resources to our better performing stores with the goal of converting their customer experience into a world-class integrated retail experience.

We currently expect the store closure and inventory reduction actions to reduce peak inventory in 2012 by $500 to $580 million and reduce our peak borrowing need by $300 to $350 million in 2012 from levels that may have resulted in 2012 without such actions.

At December 23rd , we had $483 million of borrowings outstanding on our domestic revolving credit facility leaving us with over $2.9 billion of availability on our revolving credit facilities ( $2.1 billion on our domestic facility and $0.8 billion on our Canadian facility). There were no borrowings outstanding last year at this time.

During the fourth quarter through December 23, 2011 , we have not repurchased any of our common shares under our share repurchase program. As of December 23, 2011 , we had remaining authorization to repurchase $524 million of common shares under the previously approved programs.