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Collapse of retail keeps on coming with more store closures and another retail chain bankruptcy

Collapse of retail keeps on coming with more store closures and another retail chain bankruptcy

Just a month after Sears CEO Eddie Lampert gave an extremely animated Earnings Call in which one shareholder asked him if he was ‘paranoid’ and ‘delusional’ about his belief that the long-standing retailer would soon turn things around, the once primary anchor store of nearly every mall in America is closing down 66 more stores in what has been a hemorrhage of locations over the past several years.

Less than a month later, Sears quietly proceeded to close another 66 stores in Lampert’s drive to prove that he is neither paranoid not in denial, but merely a “caring” individual with a penchant for blaming the media for all his problems. Also, the company is burning through millions in cash, so it really had no other choice. The closures will include 49 Kmart stores and 17 Sears stores, with most shut by September according to USA today. The new closures are in addition to the 180 shutdowns Sears announced earlier this year.

Last month, roughly around the time Lampert was bashing “fake news” for the disintegration of Sears, the near-defunct retailer, in its latest scramble to preserve cash announced that it would delay repaying much of a $500 million loan; instead subs of Sears Holdings were granted a forebearance allowing them to repay only $100 million of the loan in July, the initial maturity date of the total debt. The remaining $400 million is not scheduled to come due until January of 2018, with Sears having an option – which it will exercise – of pushing the maturity to July of next year. The creditors will likely see at most pennies on the dollar. – Zerohedge

But these store closures by Sears were not the only bad news for retailers today, as the expected bankruptcy filing for Ignite Restaurant Group which owns dining establishments such as Joe’s Crab Shack took place here on June 7.

The operator of the Joe’s Crab Shack and Brick House Tavern & Tap chains, Ignite Restaurant Group, was finally extinguished when the company filed for Chapter 11 bankruptcy, hoping to sell itself to an affiliate of Kelly Investment Group. The company, which had seen a steep drop in sales in recent years, listed total debts as of April 30 of  $197.3 million on $153.4 million in assets. Of course, the rats left the sinking ship long ago, with CEO Robert S. Merritt resigning in April, when he was replaced with turnaround firm Alvarez & Marsal.

Ignite operates, or rather operated, 137 Joe’s and Brick House restaurants in 32 states, with “large numbers” in Texas, Florida and California, plus – of all places – three franchises in the United Arab Emirates. It employs 8,400 people, including 5,500 part-time workers. The first Joe’s opened in Houston in 1991.

In the past 30 days alone the U.S. has seen Rue 21, Gymboree, and now Ignite Restaurant Group file, or prepare to file bankruptcy paperwork in what is expected to be a bloodbath for retailers throughout all of 2017.  And if this is not a ‘Blue Light Special’ warning sign to the Fed that the next recession is already here when they get together to decide on the next interest rate hike, then nothing ever will because we know that all the central bank really cares about are their friends on Wall Street and not the foundation of the economy down here on Main Street.

Kenneth Schortgen Jr is a writer for The Daily Economist, Secretsofthefed.comRoguemoney.net, and Viral Liberty, and hosts the popular youtube podcast on Mondays, Wednesdays and Fridays. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.


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