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Strategies & Market Trends : Paint The Table -- Ignore unavailable to you. Want to Upgrade?

To: MulhollandDrive who wrote (7933)	1/1/2002 7:15:25 PM
From: MulhollandDrive	Respond to of 23786

More holiday "cheer".... geez... biz.yahoo.com Tuesday January 1, 12:35 pm Eastern Time Retailers May Close Stores, Doors in 2002 By Anna Driver CHICAGO (Reuters) - Only the fittest survive in lean times, and that could mean store closures, consolidation or even bankruptcies for weaker U.S. retailers banking on good holiday sales to pull them through the year, consultants said. ``Anybody counting on a great Christmas for survival better start preparing their Chapter 11 bankruptcy petition,'' Dominic DiNapoli, managing partner in business recovery services at PriceWaterhouseCoopers, said. Most retail chains will be glad to close the books on 2001, as weak holiday sales capped a year already marked by the recession and the Sept. 11 attacks. Consumers slashed spending on items like clothing and luxury goods and stayed clear of malls, and spent more time at home. Holiday purchases are critical to retailers' health because they can account for as much as 25 percent of annual sales. A weak season, coupled with economic damage inflicted by the U.S. recession may spell trouble for some. Although final figures for the season are not yet in, Merrill Lynch retail analysts expect same-store holiday sales will rise 0.2 percent, marking the smallest gain in about 33 years, according to the firm's data. Last year, retailer Montgomery Ward & Co., citing poor performance during November and December, filed for bankruptcy and shut its doors after 128 years in business. Regional discount chain Ames Stores Inc. (OTC BB:AMESQ.OB - news) also filed for bankruptcy protection this year, but still operates 333 stores as it tries to reorganize. Housewares chain Lechters said in October it would close all of its 315 stores. Department stores and mall-based specialty apparel chains really felt the economic pinch because consumers, mindful of tighter budgets, favored discount chains like Wal-Mart Stores Inc. (NYSE:WMT - news). ``It's pretty clear that the weakness at apparel and specialty stores is most pronounced and most vulnerable in the post-holiday period,'' Frank Badillo, economist at consulting firm Retail Forward, said. ``I do think we'll see store closings, more bankruptcies and consolidation.'' In a recent report, rating agency Fitch said it expects stronger department store chains like Federated Department Store Inc. (NYSE:FD - news) and May Department Stores Co. (NYSE:MAY - news) to acquire groups of stores from weaker counterparts. WAL-MART IS STILL KING OF THE RETAIL HILL Regional, smaller discount chains like Green Bay, Wisconsin-based ShopKo Stores Inc. (NYSE:SKO - news) and Ames are seen under pressure because they have to compete against the size and might of giants such as Wal-Mart, Kmart Corp. (NYSE:KM - news) and Target Corp. (NYSE:TGT - news). ``ShopKo in the Midwest has been doing somewhat better,'' Marie Menendez, an analyst for Moody's Investor Service, said. ``They've been successful at getting some of their operations under control, but given the kinds of increases we are seeing from Wal-Mart it's hard to tell where that customer is going to be doing their shopping,'' she said. Wal-Mart has managed to snag market share from other retailers, grocery chains and drugstores in the shrinking U.S. economy. The retail giant said on Wednesday its holiday same-store sales rose at the upper end of a range from 4 percent to 6 percent. Fitch cut ShopKo's outlook from stable to negative earlier this year partly because of increased competition from discounters like Wal-Mart and Target in the Midwest. A spokeswoman for ShopKo said no one was available to comment. Warm weather this season also hurt apparel retailers, who were denied big profit margins on items like winter coats and sweaters, Menendez said. ``J. Crew is an example where we had a positive outlook throughout the summer and they managed the down-cycle excellently,'' Menendez said. ``They maintained liquidity and were able to continue to reduce debt, until they stopped selling sweaters.'' Moody's rates J.Crew's debt ``junk'' and gives the retailer a ''negative'' outlook. A ``junk'' rating on debt ordinarily raises borrowing costs. J. Crew is a closely held clothing retailer based in New York. The company reported that sales at their stores open at least a year fell 24.8 percent in November. Officials at J. Crew were not immediately available to comment. Retailers like Mattress Discounters Corp. have also not fared well in recent months because they are highly leveraged and ``...have very low tangible assets,'' Menendez said. Consumers also stopped buying mattresses in the recession. Larger retailers like Saks Inc. (NYSE:SKS - news) and Dillard's Inc. (NYSE:DDS - news) and discount giant Kmart, which have seen sales and profits flag in recent months, have enough liquidity to make it through more lean times, analysts said.