Sunday, March 15, 2009

Financial news: Companies that might be soon for the dirt nap

Of bankruptcy, closure, and all that.

The recent news about Six Flags caught my eye. One reason is that I have a season pass to Carowinds, and I'm very interested in keeping an eye on my investments. Not like that snazzy new computer I bought at Circuit City with the five year warranty ... HAW! Joke's on me!

But one of the things that interested me about the article linked above was the segment somewhere in the middle about companies that have recently filed for Chapter 11. Along with the aforementioned Circuit City - closing its doors for good as of last weekend - there were some very interesting names on that list. And in the interest of the ever shifting tides of internet reporting, where articles are here today, gone tomorrow, I'm going to list those out, but feel free to check out the original article.

- Magna Entertainment, whose operations include Baltimore's famous Pimlico racetrack that hosts the vaunted Preakness race;

- RV maker Monaco Coach (they make an RV called the Beaver);

- Engagement ring chain Robbins Brothers (apparetnly, ain't no one getting married, which is funny, because recently I've seen two news bytes on the set about how no one's getting divorced in these harsh economic times);

- Joe's Sports & Outdoor (never heard of 'em);

- Ritz Camera Centers, which operates under such names as Ritz Camera, Wolf Camera, Kits Cameras, Inkley's and The Camera Shops;

- Philadelphia Newspapers, the parent company of the Philadelphia Inquirer and Philadelphia Daily News;

- General Motors' Saab subsidiary;

- Trump Entertainment, casino & resorts;

- Peanut Corp. of America, the company at the heart of a salmonella outbreak that has sickened hundreds and may have killed 9 people;

- Midway Games Inc., of "Mortal Kombat" fame;

- S&K Famous Brands menswear;

- Bruno's Supermarkets (never heard of 'em);

- Housewares and jewelry retailer Fortunoff;

- Spectrum Brands, whose products include Rayovac batteries and Remington razors;

- Cardboard box materials producer Smurfit-Stone;

- Chicago-based suitmaker Hartmarx Corp.;

- Minnesota's largest newspaper, the Star Tribune;

- Black Angus Steakhouse;

- Technology giant Nortel Networks;

- Goody's clothing store, which will probably have already been shut down by the time you read this;

- Gottschalks retailers;

- LyondellBasell Chemical Industries;

- China and crystal maker Waterford Wedgwood;

- and, also listed in the article, is the late Circuit City.

What stands out when I review this list? The remarkable number of companies that deal in what I'd call frivolous consumption items. Two gambling spots, several jewelers, crystal and housewears manufacturers, suitmakers & retailers, and that RV company ... those account for well over half of the list. Seems that conspicuous consumption is down; if I didn't know better - and this dips way farther into the deep end of the conspiracy & paranoia pool - I'd swear the upper class were stockpiling and saving in preparation for a pending class war.

On that list, however, are some companies that are quite lamented, once news of their financial situation has come to light. On that list: Midway Games; Goody's, where I was able to pick up some work clothes when the only other option was (pbbbt) Old Navy (pbbbt) (which has actually become conspicuous by the absence of their ads on the television, which were at one point inescapable and mindnumbing as fuck); and of course, Circuit City's demise sucks, as they were a nice alternative to Best Buy, if I was looking for an item and Best Buy didn't have it in stock.

Of special note is that peanut place, since their position on the Chapter 11 list is due not necessarily to the harsh economic times, but to their own unique fucked-uppedness. Kill 9 people, go out of business; sounds pretty "cause and effect" to me.

Now, for a juxtaposition, I dug out an old article that I'd saved for myself to use when charting the wave of the recent financial downturn. The article - 15 Companies That Might Not Survive 2009 - put Six Flags on the list.

Read the article for further info, but here for the sake of convenience do I post the companies listed:

Rite Aid - Claire's Stores - Chrysler - Dollar Thrifty Automotive Group - Realogy Corp - Station Casinos - Loehmann's Capital Corp - Sbarro - Six Flags - Blockbuster - - Krispy Kreme - Landry's Restaurants - Sirius Satellite Radio - Trump Entertainment Resorts Holdings - BearingPoint

One thing that came to mind while reading this article was, how is this line of reporting good for consumers, good for the businesses, and good for the economy all the way around? Yes, it's important to notify investors of potential pitfalls, but say I'm Joe Average (but you can call me by my middle name, Above, HAW!) and I read that a company is in a slump. That seems to (however erroneously) telegraph that the writing's on the wall for that company, and in these days of companies shuttering their doors, I'm probably going to seek alternative, and presumably more stable, businesses into whose goods I can put my money. It's like when you're a kid & you hear that Mountain Dew makes you sterile; you're going to at least consider drinking Mello Yello instead.

And then, consider a company like Six Flags - where increasingly disgruntled employees are in charge of vehicular amusements whizzing 100s of feet in the air at speeds unsafe for any sudden stops or derailments? If I know THAT company is laying off staff, I'm even less inclined to go there with my dollar. Thus, less money goes into the company, and they slide even further into debt, bankruptcy, and ultimately liquidation. Competition dwindles, and then the bulk of interests in particular business avenues only rest on the shoulders of very few businesses that cater to the consumer. Should the economic hardships continue, what then happens to those companies left standing, when and if even they fail to bring the financial chops to the table?

Interesting post-script to the Circuit City thing: Here we are, a week removed from the closure of their doors. A quick trip through the doors of Best Buy, right across the street in beautiful Greenville, revealed absolutely shit-all in the way of their DVD selection ... unless of course your interest is solely in what films have come out in the last 5 years. My first reaction was, "I wonder if Circuit ... City ... has a ... copy ... um, yeah ... noooo ...," and I shuffled out the door, mumbling to myself about the rebellion of the middle class & lamenting that I can't find a single copy of "Let the Right One In."


Diane said...

Happy to report that Robbins Brothers is still helping couples in love find the rings of their dreams. True, the economy is tough and we have been impacted as have other retailers, but we're receiving emails everyday from all over the country as well as from soldiers serving overseas asking for help planning the perfect proposal.

Couples are shopping with tighter budgets, and the cool thing is that the size of the diamond doesn't matter - Robbins Brothers doesn't adhere to the old "two months salary" rule. In fact, many guys and gals choose to exchange simple bands, without a diamond, as a symbol of their love. One of our $195 promise rings is a popular engagement ring choice right now.

It's encouraging to see that divorces are on the decline - one ray of hope during this challenging time in history.

Thanks for letting us post this.

Di Ferraro and Tracey Lyles - Robbins Brothers Romance Bloggers

Nate said...

I welcome you guys, and appreciate your comments and input.

I offer this article I found as a counterpoint, once I did a bit more research on the Robbins Brothers business:

Robbins Brothers: Breaking It Down

It defines a tentative summary of how Robbins Brothers intends to resolve their bankruptcy issue, including selling the bulk of their assets essentially to themselves, which is a mindblowingly interesting strategy. But read up on this one for more.

Not singling out Robbins Brothers on this, but it does amaze me how recently I've observed some of the most financially creative strategies from companies in these, our harsh economic times.

Of course, the linked article is a blog article, so file it under "editorial" for the moment, but also read the comments section, which pretty much amounts to 2/3 of the commentators saying, "I ordered some merchandise from Robbins Brothers, now where's my shit at?"

Rev. Joshua said...

Speaking of financial creativity, I was shocked to find out that Charter Communications was expected to file bankruptcy as they hadn't posted a profit since 1999. I don't see how our economy is supposed to work if the largest companies can go a decade without making money.

Nate said...

Yes, that's remarkable. I am very concerned for the spirit of corporate competition in the coming months.

Hell, on the retail side of the coin alone, there's going to be some interesting changes on the landscape, where K-Mart, Target, Best Buy, and Wal-Mart are concerned. I'm putting money on there being no K-Mart before 2009 is done.