Going for broke - courts can't keep up with company failures

The law can't cope with the number of companies going broke.

It's becoming a world wide picture.

NBR reports Auckland’s High Court has had to schedule extra sessions to cope with the increasing number of companies going under.

The number of businesses being placed into liquidation is rising dramatically as the recession bites: last week in Auckland alone, more than 100 companies were called in court proceedings to be closed or placed into liquidation.

In the UK, a company which broadcasts English Premier League football under the name GTV to tens of thousands of subscribers across Africa has gone into liquidation.

In Minnesota today, the newspaper, the Star Tribune's move to file for Chapter 11 bankruptcy puts 1,400 local workers' jobs in limbo.

Online shopping mall takes a hit

Telecom has had a reality check.

It has decided to close its online shopping mall Ferrit.

“Ferrit has continued to grow during the past three years but the current retail environment has meant the break-even point has shifted out a number of years. The decision has now been made to refocus and resources will be directed to other areas,”

Cafes next to fall?

People with designer dogs and flash clothes don't have to worry - yet.

But others are reaching for their basics brand instant coffee instead of their usual $4+ coffee fix.

Independent research house IbisWorld says coffee, small clothing stores and car dealerships face the biggest threat of going under as a deteriorating economy leads to more job losses.

Tyre manufacturing, car retailing, international airlines and real estate are among the jobsu most at risk..\

Desperate retailers try the bundle trick

The malls are back to being dead. Retailers are trying the
bundle trick - "hey buy this or that or anything and we will throw in something else for half price, quarter price.. OK still not happy? we will make the second item free - does that suit?"

Understatement of the year (and its only Jan 1) goes to The NZ Retailers Assn which says this year's challenges "are here for a little longer yet", (yeah like a couple of years of blood on the retail floor) and stating the obvious- that the fate of retailers in 2009 likely tied to the state of the global economy.

This in a country where the NZX 50 index closed an abysmal 2008 with a record 33 per cent fall for the year

Leading US right winger Fox news host Bill O'Reilly has written a column for New Years describing the economic chaos hitting many Americans "like a back alley mugger, " and adding: " What a disgrace. Wall Street hustlers gamed the system by trafficking in bad loans while Congress and the Securities and Exchange Commission looked the other way. Awful. "So, I learned a painful lesson from all that: Big Brother is not watching out for us. Orwell had it wrong. We are pretty much on our own, as the federal government simply cannot or will not protect the folks from danger. Never again will I assume the feds are looking out for me."

Sony struggles in the recession

Sony - which laid off 8 thousand or 4% of its global work force - is now struggling with an overpriced gaming console it has yet to make money from - the PS3 (right).
Now comes new US sales figures for November from NPD showing PS3 sales dramatically falling while its rivals increase. Sales of the PS3 fell 19% last month from a year earlier, while sales doubled for the Wii console and rose 8% for the Xbox 360.
The WSJ speculates this morning that Sony's strategy of selling a pricey game machine with advanced features and cutting-edge components appears to be backfiring as a deepening recession has U.S. consumers more price sensitive than ever.
It points out that if Sony doesn't close the gap with its rivals, it could risk making the PS3 an afterthought to game publishers, who focus most of their resources on the machines with the most users. that it's possible to buy a Blu-ray player and an Xbox 360 for less than a PS3 and that Sony gambled and lost in its stupid policy of not cutting PS3 prices to boost sales before the holidays because of Sony Chief Executive Howard Stringer's commitment to making the games division profitable after heavy investment in the PS3 machine.
Businessweek gives some suggestions on what's needed if PS3 is to be saved.
Information Week notes it's cheaper now to make a PS3 after Sony cut costs but this may still be too late.

Consumers lost -confidence plunges

US consumer confidence plunged to a historic low in December amid the rapidly deepening recession and the outlook for the next six months is "quite dismal," according to a private research firm, which has been measuring consumer confidence since 1967.

Consumers' outlook for the first half of 2009 remains "quite dismal," and they see "only a modest recovery" in the second half of the year.

Australian stocks are among many to end 2008 with their worst annual fall on record after a year scarred by the global financial crisis.

Big UK retailers go bust

The Independent reports two more big UK retailers have collapsed into administration, becoming the latest victims of the Christmas retail crisis and sparking fears over hundreds of jobs.

USC, the 58-store branded fashion chain backed by the business tycoon Sir Tom Hunter, appointed the accountancy firm PKF as administrator and Passion for Perfume, a 45-store fragrance chain, has also called in the administrators.

They follow the appointment of administrators by Whittard of Chelsea, the coffee and tea specialist, The Officers Club, the menswear chain, and Zavvi, the entertainment retailer.

Empty space as retail chains trim their store numbers

The amount of abandoned and empty office, warehouse and business space continues to grow.Watch for two other retail trends in the next few months.

Stores will close - and chains will reduce their number of stores.

Bloomberg reports a prediction from the International Council of Shopping Centers that US retailers may close 73,000 stores in the first half of 2009.

Talbots Inc. and Sears Holdings Corp. are among chains already closing underperforming locations.

It's like the old Soviet Union

A Toronto Sun columnist, Eric Margolis, likens the US car industry to the old Soviet Union:

Economically declining, bereft of new ideas, producing unwanted products, run by dimwitted careerist bureaucrats.

America produces the wrong cars, and far too many. The bloated auto industry must downsize. It has been selling cars only thanks to the steroid of cheap, easy credit — in effect, almost giving them away. Now that the drug is largely cut off, sales have nosedived.”

He makes the excellent suggestion that Americans (and us all) must

relearn the old verity that one must save for purchases and rainy days; that gambling with your home is idiotic; that there is no substitute for hard work or manufacturing; and that it’s always very risky to trust politicians or financial “professionals” with your money.

WSJ today quotes analysts estimating that from about

10% to 26% of all US retailers are in financial distress and in danger of filing for Chapter 11.

Retailers will trim inventory and reduce the number of suppliers. That, in turn, will cause a ripple effect, prompting a number of weaker manufacturers, small brands and underfunded fashion labels to fail. New retail formats and concepts stores are likely to be curtailed in the coming year. And luxury-goods makers already are working to cut the long lead times between orders and store delivery as a way to reduce risk.

“We will have a lot fewer stores by the middle of 2009,” says Nancy Koehn, professor of business administration at Harvard Business School. “It’s happening very, very quickly because of the financial crisis and the recession.”

Cheap prices give Amazon a boost

Amazon.com is calling this holiday season its “best ever,” saying it saw a 17% increase in orders on its busiest day — a rare piece of good news in a season that has been far from merry for most retailers, including online businesses.

Amazon customers ordered more than 6.3 million items on Dec. 15, compared with roughly 5.4 million on its peak day last year, the company said. It shipped more than 5.6 million products on its best day, a 44% surge over 2007, when it shipped about 3.9 million on its busiest day.

Amazon’s best-sellers included the Nintendo Wii game console, Samsung’s 52-inch LCD HDTV and Apple Inc.’s iPod touch.
Forrester Research analyst Sucharita Mulpuru said Amazon’s experience shows the current economy is favoring discount retailers, both online and offline.

Jobs go, retail moves to 50% off

The number of Americans filing first-time claims for unemployment insurance rose last week to a 26-year high, indicating employers are stepping up job cuts as the recession deepens, according to reports today.

Meanwhile a trip up and down the main retail outlets have shown shops are now so desperate after a terrible Christmas that they are discounting at 50% off - even major retailers.

List of retail failing is growing

There’s very little joy left for retailers this season,” says C. Britt Beemer, founder of America's research group. “Wal-Mart continued to dominate shopping this year predicting a rash of financial problems for retailers in the wake of the dismal holiday season. A number of major names, such as Macy’s, are in trouble over the long run, and we will undoubtedly see more retail bankruptcies in the New Year.
NBR reports the list of smaller retailers being forced into receivership or liquidation is growing as consumers keep spending under tighter control.

Tie Rack was placed into liquidation by Corporate Finance and insolvency firm Staples Rodway is managing several recent receiverships such as high-end Auckland furniture stores Eon Design, which has this notice (above right) on its now-empty Britomart Place store.It’s also dealing with the receivership of Garlands Furnishing Specialists after 50 years in business and also managing The Fine Wine Delivery Company through voluntary administration, is trying to offload wine stocks from the recently closed Christchurch outlet.

Make or break week- worst for 40 years

It’s a make or break week for retailers. After a dismal Christmas, some will rely on massive Boxing Day sales to generate much-needed hard cash to pay bills.

But crazy discounting on top of pre-Christmas discounts means the margins are so low, it won’t help the bottom line and some businesses will fail.
The Washington Times reports that recession worries have put a monumental chill on holiday sales, which are on track to be the worst in at least four decades raising the possibility of many retail bankruptcies next year.

The slump comes as the nasty turn in the economy continued to eat away at consumer wealth and confidence, with home sales hitting a 17-year low last month and home prices falling at the fastest rate in at least 40 years. The rapid decline of home values - the largest source of wealth for most consumers - is contributing to the funk that is sinking holiday sales.

Christmas retail a disaster

As Christmas shopping froze, shops like this one kept changing the discount eventually pasting over the older ones with 50% off. Watch for 70% on Boxing Day.
U.S. holiday sales will fall more than forecast after recession fears kept shoppers from spending in the last weekend before Christmas according to a US retail group.

Last weekend had the lowest U.S. shopper turnout in at least six years.