H/t reader kevin a.
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Investors in retail malls didn’t need another wake-up call. They’ve been wide awake all year, hearing from Wall Street that there’s no brick-and-mortar meltdown even as the shares of their real estate investment trusts (REITs) have gotten crushed by the travails of brick-and-mortar retail and the over-malling of America. But late Thursday, mall investors got another unneeded wake-up call.
CBL Properties, a mall REIT with 119 mostly retail-oriented properties, reported earnings, and shares plunged 26% on Friday, to $5.92. They’d already been dropping for years because the brick-and-mortar retail meltdown is structural, and not new, and will not turn around before it’s finished melting down. Shares of CBL are down 50% year-to-date and 75% from May 2013.
More retailers reported falling sales this month than at any point since March 2009 as British shoppers cut back on spending in food shops, department stores and furnishing specialists.
Prices are rising faster than wages, squeezing the finances of many households and denting their ability to buy more in the shops.
H/t reader Squodgy:
“I wonder what’s going on to cause this?????? Erm….”
Can’t think of any other reasons. Haha.
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POWER firms threw the switch on almost 13,000 struggling Victorians in the first three months of this year.
The 12,718 residential customers cut off for not paying their gas and electricity bills were 2000 more than were cut off in the previous quarter.
And since last July, firms flouting proper procedure wrongly disconnected at least 520 customers — including six who needed power for life-supporting equipment such as respirators and dialysis machines.
As part of the data dump on Friday, the Commerce Department released its estimates for retail sales for September. If you just looked at the headlines, you’d get the impression that our American consumers suddenly had gone out to splurge, fired up by two powerful, destructive, and deadly hurricanes:
Brick-and-mortar retail meltdown strikes again – this time, Toys R Us. In what is a classic sign, the company has hired mega law firm Kirkland & Ellis, whose bankruptcy-and-restructuring practice is considered a leader in the now booming bankruptcy-and-restructuring industry.
Toys R Us, with 1,694 stores globally, has $5.2 billion in long-term debt, according to its latest quarterly report, and sports a negative equity of $1.3 billion. Quarterly sales declined 4.8% year-over-year, to $2.2 billion. This isn’t a one-quarter dip: sales are down 15% from the same quarter in 2012. And the net loss jumped 30% year-over-year to $164 million.
The company needs to restructure its debts, particularly $400 million that is coming due in 2018, and a bankruptcy filing is one of the options, “sources familiar with the situation” told CNBC on Wednesday.
H/t reader squodgy:
“Should have moved to online years ago.”
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As Amazon flirts with a $500 billion market cap, letting Jeff Bezos try on the title of world’s richest man on for size if only for a few hours, for Amazon’s competitors it’s “everything must go” day everyday, as the bad news in the retail sector continue to pile up with the latest Fitch report that the default rate for distressed retailers spiked again in July.
According to the rating agency, the trailing 12-month high-yield default rate among U.S. retailers rose to 2.9% in mid-July from 1.8% at the end of June, after J. Crew completed a $566 million distressed-debt exchange. Meanwhile, with the shale sector flooded with Wall Street’s easy money, the overall high-yield default rate tumbled to 1.9% in the same period from 2.2% at the end of June as $4.7 billion of defaulted debt – mostly in the energy sector – rolled out of the default universe.