Report: Toys ‘R’ Us preparing liquidation plan
Toys “R” Us is reportedly getting closer to winding down U.S. operations.
The toy giant is in the process of drafting the court motion for its liquidation plan, which it could file as early as the end of day on Wednesday, CNBC reported, citing a source familiar with the situation. A liquidation is likely to result in the closing of all Toys “R” Us U.S. stores.
The retailer filed for bankruptcy in September, and went on to experience a disappointing holiday selling season, citing “operational missteps.” According to the report, Toys “R” Us has come under increased pressure and its low cash balance left it at risk of breaching the terms of its bankruptcy loan. This week, the retailer missed a payment to some of its vendors, CNBC said.
Toys “R” Us has struggled under increased competition from Amazon, Walmart, Target and others. But a big part of its problem stems from its heavy debt load, which dates back to 2005, when the retailer was purchased by private equity investors KKR, Bain Capital, and Vornado Realty Trust in a $7.5 billion buyout. Toys “R” Us has struggled to update its offerings and processes, both online and in store, and has lagged behind its competitors digitally as its debt has put a strain on its ability to invest in its business.
In February, The Wall Street Journal reported that Toys “R” Us was planning to shutter an additional 200 stores and lay off a significant portion of its corporate staff. This came after a court filing in January in which the chain said it was planning to shrink its U.S. store portfolio by as much as 20% — about 180 locations — as part of a plan to emerge from bankruptcy before the 2018 holiday season.
Toys “R” Us’ liquidation would be a big blow for the overall toy industry, as the chain makes up about 15% of U.S. toy revenue, Bloomberg reported.
Dick’s Sporting Goods’ Q4 profit tops Street; revenue, comp-sales fall short
The nation’s largest sporting goods retailer beat fourth-quarter profit expectations but missed on sales and provided a downbeat outlook for its current fiscal year.
Dick’s Sporting Goods’ net income rose to $116.0 million, or $1.11 a share, in the quarter ended Feb. 3, which included a $6 million charge related to the recent tax legislation, from $90.2 million, or 81 cents a share, in the year-ago period. Excluding non-recurring items, adjusted earnings per share came to $1.22, topping analysts’ estimates.
Revenue rose 7.3% to $2.66 billion from $2.48 billion. Analysts had expected revenue of $2.74 billion. Same-store sales fell 2.0%, a bigger drop than expected.
E-commerce sales increased approximately 9% on a 13-week to 13-week comparative basis as the retailer completed its first holiday season on its new Web platform. Online penetration for the fourth quarter was 19.0% of total net sales, up from 17.9% last year.
Dick’s plans to open approximately 19 namesake stores, and relocate approximately four stores, in 2018. It doesn’t expect to open any new Field & Stream or Golf Galaxy stores in 2018.
For 2018, the retailer expects same-store sale to be flat to down in the low single-digit percentage range. The Street had been looking for a 0.2% rise.
Dick’s said it will no longer provide a quarterly outlook “to more closely align with industry practices.”
“Looking ahead, we see considerable opportunity to deliver a stronger performance as we make improvements to our business,” said Lauren R. Hobart, president, Dick’s Sporting Goods. “Across the organization, we are focused on executional excellence and enhancing our omnichannel capabilities as we continue to transform to meet our customer’s ever-changing needs. Our priorities include elevating the customer experience across our stores and our website, and leveraging the strength of our brand to deepen customer engagement and drive omnichannel traffic.”
For the full year, net income totaled $323.4 million, or $3.01 per share, up from $287.4 million, or $2.56 per diluted share in the previous year.
As of February 3, 2018, the company operated 716 Dick’s Sporting Goods stores in 47 states, 94 Golf Galaxy stores in 32 states, and 35 Field & Stream stores in 16 states.
Whole Foods Market to meet with key vendors
Whole Foods Market and some of its most important vendors are reportedly at odds.
The grocer will meet with some of the most important brands it sells at a meeting on March 19, reported CNBC. The meeting comes as tensions have been rising as Whole Foods seeks to centralize its merchandising and move from a local orientation to a national one, the report said.
A bit point of debate for Whole Foods’ larger vendors is the proposed new servicing fee, which will charge vendors for the grocer’s efforts to centralize its merchandising, according to the report.
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