Published on: February 23, 2018
There are a couple of stories this morning reflecting on the financial troubles being experienced by a pair of retailers…
• The Buffalo News
has a story about how Tops Markets CEO Frank Curci “has a plan to bring Tops Markets out of bankruptcy and make the supermarket chain stronger and more competitive.
“First, convince the investors who own most of the $724 million in debt to swap it for stock. Potential savings: up to $60 million a year. Start investing in store upgrades again, reviving an improvement program that was largely scrapped last year when money got too tight … Beef up staffing at its 169 stores to improve service. Maybe even get more aggressive in advertising.”
The problem, of course is that Curci had a plan four years ago, too: “Invest modestly but steadily to upgrade stores. Expand into rural markets where Tops was the only store in town. Over time, Tops' sales would rise, or so the plan went, making its interest payments more bearable. In the end, though, the plan thwarted by falling prices and stiff competition that kept sales from growing.”
Curci maintains that the company’s “business is strong. Our balance sheet is bad.”
And so, getting the balance sheet in order is job one, with a complex series of moves necessary to deal with debt and pension liabilities.
But Burt Flickinger, managing director at New York City retail consultant Strategic Resource Group, tells the News
that “Tops needs to do more than just shed debt to be successful coming out of bankruptcy. ‘Tops needs a better strategic plan to take care of the customers,’ he said.”
• USA Today
has a story about how “the odds that Toys R Us will be able to emerge from bankruptcy are growing slimmer, according to bankruptcy and restructuring experts.”
The reason? Toys R Us apparently made a big gamble when it declared bankruptcy before
the holidays. Normally, retailers wait until after the holidays for such a move, figuring that the all-important holiday season will provide a revenue bump that will allow them to fund a reorganization.
Toys R Us did it before, and then had a terrible holiday season. Which is why yesterday the retailer said it has more than doubled the number of stores it is closing in the US, and why, as CNBC
reports, Toys R Us now is “in danger of violating the terms of its bankruptcy financing due to dismal holiday sales.”
One expert puts it this way: “The Toys R Us brand has been bashed in the teeth, and it’s near the kiss of death.”