Company Closings/Cutbacks In December: KB Toys, Office Depot, And Others

    This list is not as up to date as I would like it to be, but it is fairly recent.

KB Toys Fully Liquidating Its 431 Stores; In Bankruptcy - Again
Pittsfield, MA-based KB Toys filed bankruptcy on Dec. 11. Brought out of chapter 11 in 2005 through a buyout by private equity firm, Prentice Capital Management, liquidation is the path the toy retailer is taking this time around.
The company said going-out-of-business sales would immediately commence at its 431 stores, "in order to take advantage of the last two weeks of the holiday selling season." The company concluded an "expedited and orderly" liquidation would be the best option for its debtors.

Office Depot Shuttering 126 Stores, 6 Distribution Centers, and Cutting 2009 Store Opening Plans
Boca Raton, FL-based office supply retailer, Office Depot, Inc. (NYSE:ODP), announced the closure of 126 stores and six distribution centers today, Dec. 10, 2008. The company made the announcement as part of its strategic review process, initiated in late October. Labeled underperforming, Office Depot will close 112 stores over the next three months, while the remaining 14 closures will occur over the course of 2009 as leases expire or terminations are negotiated.
Office Depot said total company headcount would be reduced by 2,200 positions as a result of the closures.

S&K Menswear Will Rack Up 81 Store Closings in 6 Months, Come January
Richmond, VA-based S&K Famous Brands (dba S&K Menswear) launched a strategic turnaround initiative on July 25, 2008 that included a realignment of its store locations. The company said it would "move aggressively to pursue early lease terminations in locations
that no longer positively represent its brand strategy or do not generate an adequate financial return." S&K's new strategy was to locate exclusively at "attractive" malls and lifestyle centers in eastern states. At the time, the men's apparel retailer had 219 stores in 26 states.
Since, it has whittled down to 196 stores. Last week, S&K said it would close another 58 underperforming stores by the end of January. In addition, the company has put its headquarters up for sale with plans to downsize its corporate operations.

EZ Lube Files Bankruptcy, Selling Assets
Santa Ana, CA-based EZ Lube, LLC, an operator of express oil change auto service stations, filed Chapter 11 on Dec. 9, 2008. The company operates 82 locations in California and Arizona under banners EZ Lube and Xpress Lube-Tech and has nearly 1,000 employees.
  EZ Lube plans to utilize a $62.5 million loan to fund its operations during the bankruptcy process; but said it intends to sell off "substantially all" of its assets.

BTWW Retail Fully Liquidating; RCS Appointed to Dispose of 78 Leases
BTWW Retail, a western wear and accessories retailer that filed bankruptcy on Nov. 3, 2008, recently retained RCS Real Estate Advisors to dispose of the leases related to the 78 stores that remain in its portfolio. Now in the midst of a full-liquidation process, BTWW recently operated as many as 130 stores under banners Western Warehouse, Boot Town, Corral West Ranchwear, Western World, and Workwear Depot.

  Expect to see much more of this in the following months. Consumers do not have the money to spend, businesses have to close.

Technorati Tags: Layoffs,Retail,Closings,Bankruptcy,KB Toys,Office Depot,Economic News

Rep Brad Miller: The World Is Flat...And Crooked

   Representative Miller ( D-NC District 13 ) is one of my favorite Representatives in Congress. I sometimes live in his district and I can say that he is one of the most forthright and honest members of the House that there is.

  For those reasons, I am posting a piece which Rep. Miller posted at DailyKos which concerns our bailout of the Wall Street hoods in suites and those same peoples lack of owning up to our currant mess.

Rep Brad Miller

Fri Dec 19, 2008 at 12:33:28 PM PST

The punditocracy is gravely concerned about business ethics in America.

Bernard Madoff’s "alleged Ponzi scheme was only slightly less outrageous than the ‘legal’ scheme that Wall Street was running, fueled by cheap credit, low standards and high greed," Thomas Friedman wrote Tuesday in the New York Times. "The Madoff affair is the cherry on top of a national breakdown in financial propriety, regulations and common sense. Which is why we don’t just need a financial bailout; we need an ethical bailout."

"In all that’s been said in recent days about the latest proposals to rescue the financial system, two words have been conspicuously absent," Steve Pearstein, a business columnist for the Washington Post, wrote in September. The words were "We’re sorry." "What responsible, honorable people do is apologize for their mistakes, promise that it won’t happen again and vow that they’ll make it up to us once the crisis has passed," Pearlstein said. "But in the past year, we’ve not heard any of that from the titans of Wall Street."

And Pearlstein was in high dudgeon last week over Wall Street executives’ continued lack of contrition. On Tuesday, Pearlstein wrote that instead of acknowledging mistakes, Wall Street executives insist that they are innocent victims of freakish, unforeseeable events "to explain why their company or their industry is suddenly in the soup," an argument that the economics blog Calculated Risk calls "Hoocoodanode."

"What capsized the economy was not a perfect storm," Pearlstein wrote, "but a widespread failure of business leadership—a failure that is only compounded when executives refuse to take responsibility for their misjudgments and apologize." Pearlstein wrote on Thursday that Wall Street executives’ "leadership failure was a big part of how we got into this mess, and it continues with their stubborn refusal to take responsibility, apologize and ask for a chance to make things right."

I suggested a little repentance was in order more than a year ago, before all of Wall Street landed "in the soup," when the subprime meltdown was just causing millions of middle-class families to lose their homes to foreclosure. I thought that was reason enough:

The financial industry was engaged in a fierce public relations battle then to present the borrowers as unsympathetic, as speculators, or people who bought far more house than they could afford. Friedman repeated, uncritically, the story of a lender giving "a worker who makes only $14,000 a year a nothing-down and nothing-to-pay-for-two-years mortgage to buy a $750,000 home." Michael Lewis, in an otherwise useful and engaging article about Wall Street’s securitization of subprime mortgages, repeated the same story with added details that the borrower was "a Mexican strawberry picker...with no English."

Like Reagan’s "welfare queen," the story of the Mexican strawberry picker has a political point: subprime borrowers are not victims worthy of our sympathy, and subprime lenders and the Wall Street firms that bought the mortgages were therefore not villains. Even if true (the story of the welfare queen was wildly hyperbolic at best), the story of the Mexican strawberry picker presents no more accurate a picture of subprime mortgage lending than the story of the welfare queen presented of poverty in America.

I’ve written in the blogosphere before about the causes of the subprime mess. Almost three quarters of subprime mortgages were refinances, not mortgages to purchase a home. And well more than half of subprime mortgages during the frenzy from 2004 to 2006 were to borrowers who qualified for prime mortgages. Most of the subprime borrowers were middle class families that had a rainy day—illness, unemployment, divorce--and needed to borrow money against their home. The problem was the mortgages, not the borrowers: the mortgages stripped borrowers of the equity in their homes with unconscionable upfront costs, and trapped homeowners in a cycle of repeated borrowing.

Lenders often boasted in their offering documents that the subprime mortgages they were selling had subprime terms, but many of the borrowers qualified for better. Purchasers of the mortgages apparently never asked whether that meant that the borrowers had been cheated. And they never asked the next obvious question: if you cheated the borrowers, how do I know you won’t cheat me? Instead, purchasers saw tidy profitability in prime borrowers in subprime mortgages.

Wall Street firms relied to their grief on rating agencies to tell them what they were buying. Middle class homeowners relied on mortgage brokers to tell them what they were signing, also to their grief.

So Steve Pearlstein is still waiting to hear "we’re sorry" for the devastation that the securitization of subprime mortgages caused to Wall Street companies and hedge fund investors. And I’m still waiting to hear "we’re sorry" for the devastation that subprime mortgages caused middle class homeowners.

Technorati Tags: Brad Miller,Financial Services,Economy,Predatory Lending,NC13,Wall Street,Bailout