Wednesday, March 9, 2016

No Longer the Authority

You need to go somewhere else....

"Sports Authority’s Flop Teaches Private Equity a Lesson: Gadfly" by Gillian Tan and Shelly Banjo Bloomberg News  March 03, 2016

When it comes to retail, private equity firms sure have had some misadventures. Add Sports Authority to the pile of buyout flops.

The sporting-goods chain was ultimately done in by a debt load that slowed it down as rival Dick’s Sporting Goods used its freer balance sheet to speed ahead.

Sports Authority shares the fate of other retail buyouts forged in the heady days before the global financial crisis. Many of those deals were based on the time-honored retail tradition of juicing sales by blanketing the country with more locations. But if the past decade taught us anything, it’s that America is over-stored, over-malled, and over-retailed.

They make it sound like the global financial crisis is over, and what was that last part?

Just opening new stores doesn’t cut it anymore. Now, retailers need to also invest heavily in e-commerce operations, online marketing, and supply chain and delivery capabilities. That can require an upfront cash plunge and take years to pay off — something private equity-backed firms aren’t always able to do because of the hefty interest payments on the debt they incurred from their LBOs.

I'm sure the executives that structured and implemented the deals got well paid though. 

The thing that strikes you are the excu$es offered up by the pre$$ for this rotten-to-the-core $y$tem that is the foundation of the economy to mask the drop in consumption that has caused an oil glut, etc.

Guys, you have all the money now. The masses are scrapping by hand-to-mouth like you wanted, and the net numbers reflect that. Please stop shoveling sh** on top of it.

Not all retail forays by private equity have ended in bankruptcy court, though. In fact, firms have big profits from backing the likes of Lululemon, Restoration Hardware, Dollar General, and Burlington Stores. And while the jury is still out on Claire’s Stores, J. Crew, and Toys “R” Us, the most recent round of retail buyouts are likely to fare better.

Speaking of juries....

For one, some private equity firms have been fishing at the bottom....

Time to throw some Coldwater from the Creek on this post and get going.