FINANCE

Struggling department store retailer strikes debt, pension obligations deals

BY By Marianne Wilson

Sears Holdings Corp. has bought itself a little more time with regard to the maturity of some debt. It also has offloaded some of pension liability.

The retailer announced on Tuesday it has reached an agreement to repay $100 million of its secured $500 million loan facility at its original maturity in July, and extend the remaining amount until January 2018. The agreement includes an option to extend the maturity for an additional six months, to July 2018.

Sears also has entered into a separate agreement to annuitize $515 million of its pension liability with Metropolitan Life Insurance Company, under which Metropolitan Life will pay future pension benefit payments to approximately 51,000 retirees. Sears previously announced it is working to reduce debt and pension obligations by $1.5 billion in fiscal 2017.

"This action is expected to have an immaterial impact on the funded status of our total pension obligations, but will serve to reduce the size of the company's combined pension plan, future cost volatility and plan administrative expenses," the company said in a statement.

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FINANCE

NRF: Border tax would result in consumer price increases of 15% or more

BY By Marianne Wilson

The proposed border adjustment tax would have a negative financial impact on retailers and consumers, as well.

Retailers would “have no choice” but to pass the higher costs on to consumers if Congress passes a proposed $1 trillion border adjustment tax as part of tax reform, the National Retail Federation warned on Tuesday.

“The border tax proposal would cause the tax burden on retailers to skyrocket,” NRF senior VP for government relations David French wrote in a statement submitted to the House Ways and Means Committee. “Under this proposal, many retailers will have a tax burden that is larger than their profits. …Obviously, they will have no choice but to pass the tax cost forward to their customers. …Small businesses may be particularly vulnerable to the impact of the border tax on prices.”

The committee held a hearing on Tuesday morning on the border adjustment proposal, which is part of the “Better Way” tax reform plan proposed by House Speaker Paul Ryan, R-Wis., and committee Chairman Kevin Brady, R-Texas.

“The retail industry has been a strong proponent of income tax reform,” French said. “We believe that income tax reform that lowers the rates and broadens the tax base can provide economic growth for the economy as a whole and can be good for the American consumer. We do not believe that a new tax system that shifts the burden of taxation to the consumer is good for our industry, which is the nation’s largest employer, or good for the American consumer.”

Among other provisions, the Ryan-Brady plan would create a 20% tax on imported goods by ending retailers’ ability to deduct the cost of merchandise that they import. That means retailers would be taxed at nearly the full selling price of imported merchandise rather than just their profit, amounting to $1 trillion in extra costs over the first 10 years.

The border adjustment tax would have significant implications for retailers and other industries that import goods into the United States, including automobiles, technology, food and fuel. Analysis by NRF and many of its member companies indicates that the proposed tax would drive up costs, erode profits and exceed any benefits from a lower rate. It would require price increases of 15% or more to retain profitability, effectively creating a new tax paid by consumers.

The BAT would also put at risk millions of retail-supported jobs, the NRF said. A BAT could cause retailers to see tax bills three to five times the amount of their profits, threatening to drive some merchants out of business. The small retailers that make up 98% of the retail industry and provide 40% of its jobs would be at the biggest risk.

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ECOMMERCE

Athletic footwear brand steps up retailing experience

BY By Deena M. Amato-McCoy

Shoe Palace is moving into the cloud to enhance its omnichannel operations.

A preferred Nike retailer, Shoe Palace is known for its high-end athletic footwear and apparel, and top-notch customer service. The family-run business opened its first store in San Jose, California in 1993. Today, the company operates 118 stores nationwide, and an e-commerce site.

As Shoe Palace has grown, so has consumer demand for seamless, personalized shopping experiences. To ensure it can consistently deliver its reputable service to its valued customers, Shoe Palace is investing in the Aptos Singular Commerce suite of retail technology solutions.

The platform integrates information across channels to support one complete view of customers, inventory, orders, customer relationship management (CRM), and other operations, ensuring customers never leave the store unfulfilled. Since the platform integrates every part of the enterprise, Shoe Palace is positioned to deliver a seamless customer experiences no matter where, when or how customers shop across the brand.

“Shoe Palace was built on a strong belief that amazing service is the most important reason why any business flourishes,” said George Mersho, Shoe Palace CEO.

“We take great pride in offering customers a rewarding experience every time they step foot into one of our locations,” he said. “We achieve this by offering the best selection of premium and in-demand footwear and apparel brands, by putting the most resourceful associates on the store floor, and now by enhancing customer engagement with our Aptos investment.”

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