B & N selling itself to stay afloat.

[ZodWallop]

Originally Posted by Apache

...I too used to enjoy visiting B&N when ever I traveled. Now I do not bother since they seem more like a toy store than a book store...

You know, this old saw gets trotted out a lot. But the average B&N is still bigger than most of the book stores I've ever shopped in.

Yeah, there's specialty bookstores and giant used bookstores. But Barnes and Noble and Borders replaced B. Dalton and Waldenbooks and most of those old stores could have been fit into half of the upper floor of my current Barnes and Noble.

[Apache]

You should have seen the multi storied B&N in Flushing, New York. I wanted to move in and live there.
Apache

[tubemonkey]

Speaking of staying afloat, Sears filed for bankruptcy this morning. Oh how the mighty have fallen.

Sears, the store that changed America, declares bankruptcy

[GtrsRGr8]

Originally Posted by tubemonkey

Speaking of staying afloat, Sears filed for bankruptcy this morning. Oh how the mighty have fallen.

Sears, the store that changed America, declares bankruptcy

I worked for Sears four different times--the first three while I was in college or about to enter college, in order to make some money for college.

My first foray was in 1978. Those were the glory days, but I didn't realize it. The next two times that I worked for Sears were pleasant.

The most recent time was in about 2003. It was a very different company, and not for the better.

The last that I heard, a hedge fund manager was over Sears. The scuttlebutt is that he wasn't interested in running a retail company (most hedge fund managers probably aren't. ha), he was interested in making money by selling the Sears store brands that had been very profitable--Craftsman, Kenmore, etc.

I'd say that the demise of B&N and Sears were for very different reasons--one because of making bad business decisions in the midst of challenging market conditions (e.g., the soaring sales of ebooks, in contrast to traditional books). The other company, Sears, because they intentionally fell on their sword.

ADDENDUM: One regional big-box bookstore chain, Books-A-Million (BAM), seems to have navigated well against the headwinds. Interestingly, they basically have stayed out of the ebook business, although they do sell a handful of ebooks on their website, in a very, very low key manner.

[rcentros]

Originally Posted by GtrsRGr8

The last that I heard, a hedge fund manager was over Sears. The scuttlebutt is that he wasn't interested in running a retail company (most hedge fund managers probably aren't. ha), he was interested in making money by selling the Sears store brands that had been very profitable--Craftsman, Kenmore, etc.

Yep, another leveraged buyout, like Toys-R-Us. I'm fed up with these greedy vultures. The last I saw, Toys-R-Us might come back.

[tubemonkey]

Maybe everyone else should call it quits and let Amazon be the one and only retailer for the US

[Nate the great]

Originally Posted by rcentros

Yep, another leveraged buyout, like Toys-R-Us. I'm fed up with these greedy vultures. The last I saw, Toys-R-Us might come back.

not really
to give you an analogy, Toys-R-Us was a hit and run, while Sears/KMart was a decade-long auto-da-fe.

Sears and KMart were run by a psychopath who tried to apply Ayn Rand's principle's to running a business. It did not go well:
https://www.salon.com/2013/07/18/ayn...ium=socialflow

[ZodWallop]

Originally Posted by rcentros

Yep, another leveraged buyout, like Toys-R-Us. I'm fed up with these greedy vultures. The last I saw, Toys-R-Us might come back.

Vultures have their place in ecology.

I'm a very liberal 'let's save everyone and hug them too!' type. But really, Toys R Us or [insert company name here] wouldn't have been in that position if their business was run well in the first place.

Sears was bought out so the successful brands could be parted off. But if Sears as a chain of stores was still a successful business idea that was run poorly, it would have been rescued.

Even though it makes me sad, the same is likely true for B&N. The days of the big box book store are likely behind us and won't come back. I have a successful Barnes and Noble in my neighborhood. I like knowing it is there. But the truth is, I rarely go there.

[Nate the great]

Originally Posted by ZodWallop

Vultures have their place in ecology.

I'm a very liberal 'let's save everyone and hug them too!' type. But really, Toys R Us or [insert company name here] wouldn't have been in that position if their business was run well in the first place.

Sears was bought out so the successful brands could be parted off. But if Sears as a chain of stores was still a successful business idea that was run poorly, it would have been rescued.

Nope.

One of the problem with the news industry right now is that financially healthy local newspapers are being bought up by venture funds and systematically strangled. Killing the golden goose is quite profitable.

[rcentros]

Originally Posted by ZodWallop

I'm a very liberal 'let's save everyone and hug them too!' type. But really, Toys R Us or [insert company name here] wouldn't have been in that position if their business was run well in the first place.

No. Leveraged buyout vultures find companies that are established, have good credit and then buy a controlling interest. Then they take out huge loans on the good name of that company, and milk it as it dwindles because all it can afford to do now is pay the interest on the freaking loan the vultures burdened it with. Even in it's last year, Toys-R-Us was bringing in $11 billion dollars. That's why the banks have decided (or at least are mulling) bringing back Toys-R-Us. They know that, without the vulture debt, Toys-R-Us could be a going business again. And the toy makers are desperate for a real retail toy outlet.

[rcentros]

Originally Posted by Nate the great

Nope.

One of the problem with the news industry right now is that financially healthy local newspapers are being bought up by venture funds and systematically strangled. Killing the golden goose is quite profitable.

They're even doing it to a company like Verizon now. They brought in the CEO who decimated Siemens and he's overseeing the ripping apart of Verizon. Short term profits for the greedy vultures, hundreds of thousands out of work.

[ZodWallop]

Originally Posted by Nate the great

Nope.

One of the problem with the news industry right now is that financially healthy local newspapers are being bought up by venture funds and systematically strangled. Killing the golden goose is quite profitable.

Newspapers, I'll give you.

Originally Posted by rcentros

No. Leveraged buyout vultures find companies that are established, have good credit and then buy a controlling interest. Then they take out huge loans on the good name of that company, and milk it as it dwindles because all it can afford to do now is pay the interest on the freaking loan the vultures burdened it with. Even in it's last year, Toys-R-Us was bringing in $11 billion dollars. That's why the banks have decided (or at least are mulling) bringing back Toys-R-Us. They know that, without the vulture debt, Toys-R-Us could be a going business again. And the toy makers are desperate for a real retail toy outlet.

Toys R Us was bought out in 2005. It closed in 2018. It failed in part because its Kids R Us and Babies R Us stores weren't successful. Those were the loans it was paying on. It also faced competition from Amazon, Walmart and Target.

Bain did dismantle KayBee Toys as you describe. But Toys R Us had more serious problems.

[rcentros]

Originally Posted by ZodWallop

Toys R Us was bought out in 2005. It closed in 2018. It failed in part because its Kids R Us and Babies R Us stores weren't successful. Those were the loans it was paying on. It also faced competition from Amazon, Walmart and Target.

I don't think you've studied this very closely.

http://theweek.com/articles/761124/h...sts-ate-toys-r

Our story begins in 2004. After big success in the 1980s, Toys 'R' Us' performance turned lackluster in the 1990s. Sales were flat and profits shrank. Toys 'R' Us was a public company at the time, and the board of directors decided to put it up for sale. The buyers were a real estate investment firm called Vornado, and two private equity firms named KKR and Bain Capital. (You may remember the latter from 2012 campaign ads: It was co-founded by former Republican presidential candidate Mitt Romney, though he'd moved on well before this.)

The trio put up $6.6 billion to pay off Toys 'R' Us' shareholders. But it was a leveraged buyout: Only 20 percent came out out of the buyers' pockets. The other 80 percent was borrowed. Once Toys 'R' Us was acquired, it became responsible for paying off that massive debt burden, while also paying Bain Capital and the other two firms exorbitant advisory and management fees.
...

On its own, that shouldn't have been catastrophic. The problem was the massive financial albatross the leveraged buyout left around Toys 'R' Us' neck. Just before the buyout, the company had $2.2 billion in cash and cash-equivalents. By 2017, its stockpile had shriveled to $301 million, even as its debt burden ballooned from $2.3 billion to $5.2 billion. Meanwhile, Toys 'R' Us was paying $425 million to $517 million in interest every year.

In other words, if Bain, KKR, and Vornado had never come along, Toys 'R' Us wouldn't be doing stellar, but it probably could've muddled through. As recently as last year, the company still accounted for 20 percent of all U.S. toy sales.

This enormous cash drain probably made it impossible for the company to invest or innovate even if its trio of buyers had been up to the challenge. It also made it impossible to sustainably turn a profit. Toys 'R' Us consistently saw net losses from 2014 to 2017. But in the last three years, those net losses were considerably smaller than its debt payments. In fact, the losses were shrinking amidst a general boom in toy industry sales; by 2017, its losses were all the way down to $36 million.

(Emphasis mine.)

[ZodWallop]

Originally Posted by rcentros

(Emphasis mine.)

Clearly. From your same article (which is an opinion piece rather than straight reporting):

After big success in the 1980s, Toys 'R' Us' performance turned lackluster in the 1990s. Sales were flat and profits shrank. Toys 'R' Us was a public company at the time, and the board of directors decided to put it up for sale.

...

In theory, everyone wins in a leveraged buyout. It's supposed to take an ailing company private and retool it into a leaner and more effective business. Then it's sold back to public shareholders for a profit. The buyers make money; the shareholders get a healthier business; the workers stay employed.

What actually happened was Toys 'R' Us continued to stagnate. The company never really figured out how to respond to the changing market, or the rise of online retail. And it missed out on some opportunities, like licensing the Star Wars and Lego movie brands. Meanwhile, rising inequality and wage stagnation ate away at the broadly distributed middle-class consumer base that Toys 'R' Us and other retailers traditionally relied upon.

[fjtorres]

Some LBOs work out well for the company; they're not all about vulturing.

DELL being one case where going private allowed the company to retool away from Wall Street pressures. BAM seems to be surviving after going private, too.