Woolworths U.K. Closing Up Shop
New York City Woolworths, for decades one of the United Kingdom’s most popular retail chains, is going out of business.
The beleaguered chain, whose official name is the Woolworths Group, announced in mid-December that it would shut down its 807 stores by Jan. 5. In fact, the closings have already begun, with more than 400 Woolworths stores across the United Kingdom shuttered. The remaining stores will follow suit in a staggered fashion by the Jan. 5 deadline.
A retail mainstay in the United Kingdom for nearly 100 years, Woolworths’ troubles have been mounting for some time. Its stores seemed increasingly outdated and old-fashioned, particularly compared to such deep-pocketed rivals as Tesco, Asda and other competitors. But its problems intensified in 2008 under the global credit crunch as it struggled under the weight of its debt. The situation grew dire when it was forced to pay cash while buying goods from suppliers because trade credit insurers were no longer prepared to cover its suppliers.
American retail legend Frank Woolworth opened the first outlet of what would become F.W. Woolworth Co. in 1879 in Pennsylvania. Thirty years later, in 1909, he opened his first U.K. store in Liverpool.
In 1982, Woolworth sold its U.K. business to Kingfisher. The Woolworths Group was spun off from Kingfisher and began trading in 2001.
“The end of its era was probably around the 1970s,” said Richard Perks, an analyst at Mintel International in London, in a Bloomberg report. “Its glory days between the wars were great, but it never really reinvented itself.”
Consumer Confidence shaken
The Conference Board’s Consumer Confidence Index in December fell to 38.0, down from 44.7 in November. The new figure is the lowest since 1967, when the business group began tracking the index. A reading of 100 represents 1985 levels of confidence.
Also on the decline were the Present Situation Index, down from 42.3 last month to 29.4 in December; and the Expectations Index fell from 46.2 to 43.8.
“The further erosion of the Consumer Confidence Index reflects the rapid and steep deterioration of economic conditions that occurred in the fourth quarter of 2008,” said Lynn Franco, director of the Conference Board Consumer Research Center. “The Present Situation Index is now close to levels last seen in the months following the 1990 to 1991 recession, but is not as low as levels reached during the 1981 to 1982 recession. Declines in the Expectations Index appear to be moderating, but this index continues to hover at historical lows. Both sub-indexes bear careful watching over the next several months to see if they are starting to show signs of approaching a bottom. In the meantime, however, the overall economic outlook remains quite dismal for the first half of 2009, and only a modest recovery is expected in the second half.”
Consumers’ short-term outlook was only moderately more pessimistic. Those anticipating business conditions to worsen over the next six months increased to 32.8% from 28.3%, while those expecting conditions to improve rose to 13.4% from 11.5%.
The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households. The monthly survey is conducted for The Conference Board by TNS.
American Greetings to acquire Recycled Paper Greetings
CLEVELAND American Greetings announced it has reached an agreement to acquire Recycled Paper Greetings, a Chicago-based creator of humorous greeting cards with annual net sales of approximately $80 million.
Recycled Paper’s humor cards are distributed primarily through mass retail partners, drug stores and specialty retail stores. The transaction is subject to various closing conditions including a Chapter 11 reorganization process being successfully completed for Recycled Paper and other closing conditions.
American Greetings plans to continue to use the Recycled Paper Greetings name.
CEO Zev Weiss said, “The acquisition of Recycled Paper Greetings will be an excellent addition to our current product offering. This transaction will give American Greetings an enlarged product design capability and a compelling product offering that is expected to delight consumers and enhance productivity for our retail partners.”