Monday, November 10, 2008

Retail: Quotes of the Day

by Calculated Risk on 11/10/2008 12:34:00 PM

A couple of great quotes:

"There's a new realization that holding a gift card from a troubled retailer is like having a bank account without FDIC insurance."
Jerry Hirsch writing in the LA Times
From the LA Times: Gift card holders may be out of luck in retail bankruptcies. Gift card buyers beware ...

Note that the Circuit City bankruptcy is somewhat unusual in that most retailers file for bankruptcy after the holiday season. Bloomberg had an article about this last week: `Tis the Season for Retailer Visions of Liquidations
In the last quarter century, about a fifth of large retailers that went bankrupt, including RH Macy & Co. Inc. and FAO Schwarz, did so in January, using holiday sales cash to jump-start reorganizations or finance liquidations.
...
From 1980 to 2008, of the 105 large public retailers that filed for bankruptcy with assets of more then $100 million, only seven did so in December ... That was less than half the 18 that did so in January --the most popular filing month for large retailers ...

This bankruptcy season is different. ...
And the second quote of the day:
"Confidence has deteriorated so badly that merchants and bankers don't even believe in Santa Claus any more."
Martin Zohn, a bankruptcy lawyer in New York, from Bloomberg article.
Maybe this year is a little different than normal with more bankruptcies before the holidays, but I expect to see more retailer bankruptcies in early 2009.