1. Retailing Chains Caught in a Wave of Bankruptcies Katelyn Boyd Blake Phillips Karen Roseberry

2. Declared Bankruptcy Bankruptcy Levitz Bombay Co. Sharper Image Linens & Things Wicks Furniture Domain Furniture (East Coast) Alpha Omega JC Penny Office Depot Lowe’s Charming Shops Slowed Growth

3. Store Closures Foot Locker – 140 storesFoot Locker Ann Taylor – 117 stores Zales – 100 stores Wilson’s Leathers – 158 stores Pacific Sunwear – 153 stores

4. Stores going bankrupt because… Retail Inventories are not converted into revenues Chains borrow large sums to cover routine operating expenses When sales are slow, stores can’t repay their debts Stores take out more loans to repay debt

5. Why is this happening? Consumer NEEDS vs. WANTS –Spending on food and gasoline takes priority over clothes and furniture Mortgage Crisis –Nation’s banks are shying away from new loans

6. Flawed business plans have created heavy debt “For years, no deal was too ugly to finance…But now, nobody will throw money at these companies.” –Al Koch Example: The Bombay CompanyThe Bombay Company

7. Rippling Effect Example: UPS and Sealy are hung out to dry.

8. For the Retail Financial Manager Spotlights the importance of the merchandise budget

9. Sources http://www.nytimes.com/2008/04/15/busine ss/15retail.html?pagewanted=2&_r=1&sq= managing%20retail%20finance&st=nyt&sc p=1http://www.nytimes.com/2008/04/15/busine ss/15retail.html?pagewanted=2&_r=1&sq= managing%20retail%20finance&st=nyt&sc p=1 The Office