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Fair Share Law Criticized

BY CSA STAFF

Arlington, Va., Retailers are discouraged that the Maryland State Legislature voted to override Governor Robert Ehrlich’s veto of healthcare legislation that punishes the retail industry by imposing an unfair healthcare mandate on the state’s largest and most successful employers, according to the Retail Industry Leaders Association (RILA). Lawmakers overruled Ehrlich’s veto of the Fair Share Healthcare Act Fund, also described as the “Wal-Mart bill,” by a vote of 88 to 50 in the House, with one abstention after the Senate voted 30 to 17. The bill requires all employers with 10,000 or more employees to spend up to 8% of their total wages paid on employee healthcare benefits.

“This legislation makes no attempt to control skyrocketing healthcare costs, and it creates a hostile environment for Maryland retailers leading to fewer jobs, reduced tax revenues and a weakened economy,” said RILA president Sandy Kennedy. “It sets a bad precedent for other state legislatures that want to shift the burden of healthcare costs onto retailers. Instead of mandating retailers pay a fixed amount for healthcare, lawmakers should address the real problem of healthcare costs and work to enact cost-reducing legislation.”

Wal-Mart’s organized critics celebrated the bill’s passage.

WakeUpWalMart.com Campaign director Paul Blank said Maryland “delivered an inspiring message” to the rest of America.

Wal-Mart is reportedly investigating the possibility of a legal challenge to the law.

“The government has no place dictating to companies what health benefits they offer, period—let alone targeting a single scapegoat company for punishment,” said Dr. Yaron Brook, executive director of the Ayn Rand Institute, a conservative think tank.

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Musicland Files for Chapter 11

BY CSA STAFF

Minneapolis, Musicland Holding Corp filed for Chapter 11 bankruptcy protection. In doing so, the retailer pointed to a struggling market for music and movies, growing competition from discounter retailers and the growth of music downloading. The entertainment retailer said the move was necessary to complete its restructuring initiatives and refine its business model. The company has received commitments for up to $75 million in debtor-in-possession (DIP) financing from its existing bank group, led by Wachovia as agent, which will enable it to continue to operate during the restructuring period.

The company operates more than 800 retail stores and Web sites under the names Sam Goody, Suncoast Motion Picture Company and MediaPlay.com.

“We have been exploring various options for cutting costs, such as the impending closure of the Media Play chain,” Musicland President and CEO Michael J. Madden said. “We believe that the decisive action we are taking provides the company with the most effective means to restructure our operations, strengthen our balance sheet and position us to compete more effectively in the current music and movies industry environment.”

The company intends to continue normal operations and launch new business initiatives during 2006, he added.

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Coldwater Creek to Test Spa Concept in Six Locations

BY CSA STAFF

New York City, Coldwater Creek will test its day-spa concept in six locations in the first half of 2006, Mel Dick, the company’s CFO, told attendees at the S.G. Cowan & Co. investor conference on Wednesday. The spas will be located very near, or adjacent to, existing Coldwater Creek stores.

“We see it (the spas) as a great opportunity to leverage our existing brand and customer base,” Dick said. “No one is doing this on a national scale.”

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