The troubles at the American mall are coming to a boil – another big-name chain announced hundreds of new store closings and still others moved aggressively to recalibrate their businesses for the online shopping stampede

The troubles at the American mall are coming to a boil

A fresh round of distress signals sounded in the retail industry this week, as another big-name chain announced hundreds of new store closings and still others moved aggressively to recalibrate their businesses for the online shopping stampede.

Payless ShoeSource filed for Chapter 11 bankruptcy and outlined plans to immediately close nearly 400 of its 4,400 stores globally. Ralph Lauren is shuttering its flagship Polo store, a foot-traffic magnet on tony Fifth Avenue in Manhattan, the latest step in a massive cost-cutting effort. Big-box office supplies stalwart Staples is reportedly considering putting itself up for sale.

The shakeout among retailers has been building for years and is now arriving in full force.

The retrenchment comes as shoppers move online and begin to embrace smaller, niche merchants. As a result, many major chains find themselves victims of a problem of their own making, having elbowed their way into so many locations that the United States has more retail square footage per capita than any other nation. To use the industry vernacular, they are simply “overstored.”

Many have begun cutting back, sending ripples through the economy. The wave of store closures by Macy’s and Sears alone will empty 28 million square feet of retail real estate, according to an analysis by research firm CoStar. Often those vacancies are slow to fill, leaving shopping centers less hospitable to the chains that remain, feeding even more departures and job losses.

The malaise has spread even as the economy overall grows stronger and the stock market marches higher. Just this week, Urban Outfitters reported that in the current quarter to-date, its comparable sales are “mid single-digit negative.” The women’s clothing chain Bebe said in a regulatory filing Wednesday that it is closing 21 locations. Last week, yoga clothier Lululemon chief executive Laurent Potdevin acknowledged that the chain had seen “a slow start to 2017.”

Few traditional retailers are immune: The Limited filed for bankruptcy and shuttered all 250 of its stores. Hudson’s Bay, the parent company of Saks Fifth Avenue and Lord & Taylor, announced a $75 million annual cost-cutting effort. Banana Republic and Abercrombie & Fitch each named a new chief executive, leadership changes that were precipitated by ongoing struggles to connect with customers.

In a report published in late February, Standard & Poor’s said it had already lowered ratings 20 times on various retailers this year. S&P analysts wrote that they expect to see “increased levels of stress for the sector in 2017.”

As big retail closes stores, it has cost many Americans their jobs. So far in 2017, retailers have announced plans to slash more than 38,000 positions, according to data from job placement firm Challenger, Gray & Christmas. And yet some of those losses have probably been offset by new jobs at start-up retailers and e-commerce operations., for example, said this year that it expects to create 100,000 full-time roles over 18 months.

Retailers are deploying different kinds of firepower to try to regain some momentum. J. Crew announced this week that it is parting ways with its longtime creative director, Jenna Lyons, a change that effectively concedes that it needs to fix its fashion if it wants to boost its sales. Still other companies are exploring branching into different kinds of retailing formats: Ralph Lauren, for example, said it is exploring new opportunities for its Ralph’s Coffee concept. Macy’s is selling off some of its lucrative real estate portfolio, hoping to strengthen its balance sheet.

Another chain, J.C. Penney, looks to be trying to position itself to take advantage of fallout from the turmoil: The retailer has started to carry large appliances again, a potentially shrewd move that could fill a void in the marketplace as Sears and HHGregg close stores.

It doesn’t help any of these legacy bricks-and-mortar companies that customers are increasingly seeking out under-the-radar labels with a more specialized, boutique feel. The likes of Bonobos, Warby Parker, Shinola and Marine Layer are picking off shoppers that might once have filled their closets with goods from more ubiquitous chains.

Meanwhile, as worries mount for bricks-and-mortar players, Amazon’s stock hit an all-time high Wednesday. While others pare back, the Seattle company announced a deal to stream NFL games, a milestone that underscores the e-commerce giant’s growing muscle. (Jeffrey P. Bezos, the chief executive of Amazon, owns The Washington Post.)

According to research from Slice Intelligence, Amazon captured 38 percent of all dollars spent online during the holiday season. The next-closest retailer, Best Buy, had a mere 3.9 percent.

And now the old guard has to worry about Amazon encroaching in new ways: It is branching into physical retailing, including opening several bookstores. In Seattle, it is preparing to open a concept called Amazon Go, a technology-powered grocery store that would not require shoppers to go through a checkout line.

All of this change is not just pushing traditional retailers to reduce their overall numbers of stores — it is also forcing them to rethink what their stores should look like. Office Depot, for example, is converting some stores to a smaller footprint of just 15,000 square feet. Target recently announced that it is testing a new store prototype in which there will be a separate entrance and dedicated parking for shoppers looking to retrieve a “buy online, pick up in store” order.

The pledge by Team Newport to audit the $140 million Taj Mahal – $228 million with debt service – Newport Beach allocates $300,000 for Civic Center audit

Newport Beach, California –

An audit of the Newport Beach Civic Center construction process is moving ahead with a new – and higher – price tag.

The City Council voted 4-3 Tuesday in favor of the audit and to allocate $300,000 for its completion, including periodic reporting to the council.

Mayor Ed Selich and council members Keith Curry and Tony Petros voted against the measure.

Councilwoman Diane Dixon said the council owed constituents an audit of the $140 million project. She said it would also give the city a better idea of how to manage future projects the same size or scope of the Civic Center.

“My wish is this gets a clean bill of health and we can move on,” Dixon said. “I’d like to take the acrimony out of this and see this as a positive.”

Curry called the audit a political manipulation to use in the upcoming election cycle. The city manager already provided “two feet” of documents and a review of the building process, he said. Taxpayer money could be better used for projects in the community, he said.

“We’re asking consultants to tell us who won WWII,” Curry said. “It’s a complete waste of money.”

Planning for the facility started more than 15 years ago and its scope morphed significantly over the years, according to Register archives. The complex near Fashion Island opened in 2013 and included the government building, council chambers, a 450-space parking structure sunk to protect views, a 17,000-square-foot library expansion and a 14-acre park connected by an over-road bridge.

The council in June asked the city attorney’s office to hire an independent audit project manager, who could then hire a firm to do a financial and management performance audit of the Civic Center project. When the audit was originally brought up in January by council members, a price tag of $100,000 was highlighted.

Allyson Gipson, the independent audit manager hired by the city, said the industry standard for the cost of audits this size are usually one percent of the total cost of the project, though she thought the city could get an audit at about half that price.

A staff report suggested a two-phase audit, which could cost as much as $560,000 – about $110,000 for the first phase and $450,000 for the second. The council voted to limit the audit to one phase and set the limit at $300,000.
Contact the writer: 714-796-7990 or
Keeping a Campaign Promise – Auditing the Taj

Dear Friend,

Our steering committee met a couple of weeks ago to review the past year since Team Newport was elected, and plan for the 2016 city elections.

One of the key issues in last year’s election was the pledge by Team Newport to audit the $140 million Taj Mahal. ($228 million with debt service)

On a 4-3 vote, Team Newport (Diane Dixon, Kevin Muldoon, Duffy, and Scott Peotter) approved a $300,000 contract to conduct an audit with the goal of finding out if taxpayers were fleeced, or if the costs were supportable and reasonable.

Of course, leading the opposition to the audit was Keith Curry – the councilman that spent over $1 million trying to ban wood burning fire rings.

You can read the Register’s recap of the city council’s action here, including Keith Curry’s claim that the audit is a politically motivated “complete waste of money.”

I am proud that Team Newport kept their word – a novelty in these times.

Bob McCaffrey

Volunteer Chairman, Residents for Reform

Newport Beach

“If we use dollars to make debt payments, we may not have the cash to pay for government services,” – Puerto Rico on the Brink Owes Investors $5 Billion in Next Year

Puerto Rico on the Brink Owes Investors $5 Billion in Next Year

Puerto Rico faces $5.4 billion of bond payments over the next 12 months, showing the pressure on the Caribbean island as it moves closer toward defaulting on its debt.

Puerto Rico and its agencies are on the hook for $635 million in August, the largest monthly bill for the rest of 2015, JPMorgan Chase & Co. said in a July 17 report, citing data from Bloomberg and Standard & Poor’s. That includes a $36.3 million payment due Aug. 1 from the Public Finance Corp., which may not be made because the legislature failed to appropriate the funds.

The schedule illustrates the costs ahead for the cash-strapped commonwealth, where Governor Alejandro Garcia Padilla is pushing to restructure a $72 billion debt load he says the island can’t afford. The payments approach $1 billion in January and about $2 billion in July 2016, JPMorgan said. Puerto Rico has a $9.8 billion budget for the year through next June.

“If we use dollars to make debt payments, we may not have the cash to pay for government services,” Luis Cruz, the commonwealth’s budget director, told reporters Monday in San Juan. He said officials are looking at “all options” for honoring its obligations.

Puerto Rico is veering toward the largest restructuring ever in the $3.6 trillion municipal-debt market after years of borrowing to paper over budget shortfalls. The prospect has pushed down the price of commonwealth bonds amid speculation about how investors will fare. Officials are seeking to draw up a plan by the end of August.
Many Securities

The island has more than a dozen types of bonds with different security pledges, which complications negotiations. General-obligation bonds are protected by the commonwealth’s constitution, while others are backed by revenue such as sales taxes.

The scheduled August payments will cover $333 million of interest and $263 million of principal, according to JPMorgan. Most of that is for sales-tax debt, known as Cofina, and securities sold by the Government Development Bank.

Garcia Padilla said last month that Puerto Rico would look to delay debt payments for “a number of years.”

Melba Acosta, the development bank’s president, has said a restructuring wouldn’t necessarily involve paying less than the full value of securities when they mature. Even so, analysts at money-management firms including BlackRock Inc. and Pacific Investment Management Co. have speculated that bondholders may have to accept less than they are owed.

Puerto Rico bonds have slumped 8.9 percent this year, according to S&P Dow Jones Indices data. By contrast, the $3.6 trillion municipal market has rallied 0.3 percent.