REVscene - Vancouver Automotive Forum

Harvey Specter · 02-09-2009, 04:18 AM

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Rite Aid. (Ticker symbol: RAD; about 100,000 employees; 1-year stock-price decline: 92%). This drugstore chain tried to boost its performance by acquiring competitors Brooks and Eckerd in 2007. But there have been some nasty side effects, like a huge debt load that makes it the most leveraged drugstore chain in the U.S., according to Zacks Equity Research. That big retail investment came just as megadiscounter Wal-Mart was starting to sell prescription drugs, and consumers were starting to cut bank on spending. Management has twice lowered its outlook for 2009. Prognosis: Mounting losses, with no turnaround in sight.

Claire's Stores. (Privately owned; about 18,000 employees.) Leon Black's once-renowned private-equity firm, the Apollo Group, paid $3.1 billion for this trendy teen-focused accessory store in 2007, when buyout funds were bulging. But cash flow has been negative for much of the past year and analysts believe Claire's is close to defaulting on its debt. A horrible retail outlook for 2009 offers no relief, suggesting Claire's could follow Linens 'n Things - another Apollo purchase - and declare Chapter 11, possibly shuttering all of its 3,000-plus stores.

Chrysler. (Privately owned; about 55,000 employees). It's never a good sign when management insists the company is not going out of business, which is what CEO Bob Nardelli has been doing lately. Of the three Detroit automakers, Chrysler is the most endangered, with a product portfolio that's overreliant on gas-guzzling trucks and SUVs and almost totally devoid of compelling small cars. A recent deal with Fiat seems dubious, since the Italian automaker doesn't have to pony up any money, and Chrysler desperately needs cash. The company is quickly burning through $4 billion in government bailout money, and with car sales down 40 percent from recent peaks, Chrysler may be the weakling that can't cut it in tough times.

Dollar Thrifty Automotive Group. (DTG; about 7,000 employees; stock down 95%). This car-rental company is a small player compared to Enterprise, Hertz, and Avis Budget. It's also more reliant on leisure travelers, and therefore more susceptible to a downturn as consumers cut spending. Dollar Thrifty is also closely tied to Chrysler, which supplies 80 percent of its fleet. Moody's predicts that if Chrysler declares Chapter 11, Dollar Thrifty would suffer deeply as well.

Realogy Corp. (Privately owned; about 13,000 employees). It's the biggest real-estate brokerage firm in the country, but that's a bad thing when there are double-digit declines in both sales and prices, as there were in 2009. Realogy, which includes the Coldwell Banker, ERA, and Sotheby's franchises, also carries a high debt load, dating to its purchase by the Apollo Group in 2007 - the very moment when the housing market was starting to invert from a soaring ride into a sickening nosedive. Realogy has been trying to refinance much of its debt, prompting lawsuits. One deal was denied by a judge in December, reducing the firm's already tight wiggle room.

Station Casinos. (Privately owned, about 14,000 employees). Las Vegas has already been creamed by a biblical real-estate bust, and now it may face the loss of its home-grown gambling joints, too. Station - which runs 15 casinos off the strip that cater to locals - recently failed to make a key interest payment, which is often one of the last steps before a Chapter 11 filing. For once, the house seems likely to lose.

Loehmann's Capital Corp. (Privately owned; about 1,500 employees). This clothing chain has the right formula for lean times, offering women's clothing at discount prices. But the consumer pullback is hitting just about every retailer, and Loehmann's has a lot less cash to ride out a drought than competitors like Nordstrom Rack and TJ Maxx. If Loehmann's doesn't get additional financing in 2009 - a dicey proposition, given skyrocketing unemployment and plunging spending - the chain could run out of cash.

Sbarro. (Privately owned; about 5,500 employees). It's not the pizza that's the problem. Many of this chain's 1,100 storefronts are in malls, which is a double whammy: Traffic is down, since consumers have put away their wallets. Sbarro can't really boost revenue by adding a breakfast or late-night menu, like other chains have done. And competitors like Domino's and Pizza Hut have less debt and stronger cash flow, which could intensify pressure on Sbarro as key debt payments come due in 2009.

Six Flags. (SIX; about 30,000 employees; stock down 84%). This theme-park operator has been losing money for several years, and selling off properties to try to pay down debt and get back into the black. But the ride may end prematurely. Moody's expects cash flow to be negative in 2009, and if consumers aren't spending during the peak summer season, that could imperil the company's ability to pay debts coming due later this year and in 2010.

Blockbuster. (BBI; about 60,000 employees; stock down 57%). The video-rental chain has burned cash while trying to figure out how to maximize fees without alienating customers. Its operating income has started to improve just as consumers are cutting back, even on movies. Video stores in general are under pressure as they compete with cable and Internet operators offering the same titles. A key test of Blockbuster's viability will come when two credit lines expire in August. One possible outcome, according to Valueline, is that investors take the company private and then go public again when market conditions are better.

Krispy Kreme. (KKD; about 4,000 employees; stock down 50%). The donuts might be good, but Krispy Kreme overestimated Americans' appetite - and that's saying something. This chain overexpanded during the donut heyday of the 1990s - taking on a lot of debt - and now requires high volumes to meet expenses and interest payments. The company has cut costs and closed underperforming stores, but still hasn't earned an operating profit in three years. And now that consumers are cutting back on everything, such improvements may fail to offset top-line declines, leading Krispy Kreme to seek some kind of relief from lenders over the next year.

Landry's Restaurants. (LNY; about 17,000 employees; stock down 66%). This restaurant chain, which operates Chart House, Rainforest Café, and other eateries, needs $400 million in new financing to finalize a buyout deal dating to last June. If lenders come through, the company should have enough cash to ride out the recession. But at least two banks have already balked, leading to downgrades of the company's debt and the prospect of a cash-flow crunch.

Sirius Satellite Radio. (SIRI - parent company; about 1,000 employees; stock down 96%). The music rocks, but satellite radio has yet to be profitable, and huge contracts for performers like Howard Stern are looking unsustainable. Sirius is one of two satellite-radio services owned by parent company Sirius XM, which was formed when Sirius and XM merged last year. So far, the merger hasn't generated the savings needed to make the company profitable, and Moody's thinks there's a "high likelihood" that Sirius will fail to repay or refinance its debt in 2009. One outcome could be a takeover, at distressed prices, by other firms active in the satellite business.

Trump Entertainment Resorts Holdings. (TRMP; about 9,500 employees; stock down 94%). The casino company made famous by The Donald has received several extensions on interest payments, while it tries to sell at least one of its Atlantic City properties and pay down a stack of debt. But with casino buyers scarce, competition circling, and gamblers nursing their losses from the recession, Trump Entertainment may face long odds of skirting bankruptcy.

BearingPoint. (BGPT; about 16,000 employees; stock down 21%). This Virginia-based consulting firm, spun out of KPMG in 2001, is struggling to solve its own operating problems. The firm has consistently lost money, revenue has been falling, and management stopped issuing earnings guidance in 2008. Stable government contracts generate about 30 percent of the firm's business, but the firm may sell other divisions to help pay off debt. With a key interest payment due in April, management needs to hustle - or devise its own exit strategy.

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Culture_Vulture · 02-09-2009, 04:34 AM

Krispy Kreme and Sirius come as a surprise.
And since I haven't heard of most of the other companies, meh.

asian_XL · 02-09-2009, 05:31 AM

there are a lot more out there doing even worse than these.

I doubt people will care if Loehmann's Capital Corp shut down or 99% of the Claire's Stores are not doing well.

StylinRed · 02-09-2009, 05:53 AM

not a surprise all those companies have been dying for a long time

they'd probably blame the economic crisis too when they do go under

i think claires might do better than expected this year though, because they're cheap

Wykydtron · 02-09-2009, 06:07 AM

Sirius isn't a surprise. They've already had to merge with XM because both of them were doing so bad. It was just a matter of time.

Carl Johnson · 02-09-2009, 07:05 AM

why only 15? the list needs to be way longer. just banks along there are already 7 failed so far this year and whether General Motor is gonna get bailed out again is still in the air.

El Bastardo · 02-09-2009, 07:44 AM

Quote:

Originally Posted by Wykydtron

Sirius isn't a surprise. They've already had to merge with XM because both of them were doing so bad. It was just a matter of time.

It was a mutual decision that was in the works for years.
The only reason they merged so recently is because of problems with the FCC and being accused of becoming a monopoly.

!SG · 02-09-2009, 07:59 AM

these are listed companies.

but im surprised with krispy kreme. comfort foods tend to do ok during recession. its relatively a cheap treat. guess they just gonna have to fill less jelly and make bigger holes...

blockbuster, not surprised. everyone downloads movies these days. and ppl go catch it at the movie theater for the entertainment value. price of going to see a movie went down, remember how expensive it was at one point?

Ride · 02-09-2009, 08:39 AM

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Originally Posted by Physixx

Krispy Kreme and Sirius come as a surprise.
And since I haven't heard of most of the other companies, meh.

From what I heard Sirius hasn't made a cent in profit since they've launched and paying Howard Stern what ever millions he gets paid, it's just a matter of time until they down.

kookoobird88 · 02-09-2009, 10:05 AM

shit not six flags i really want to go there, the rest i dont care about lol

Rikaro · 02-09-2009, 10:13 AM

Haven't heard most of the companies. I guess that's why they're going down.

Chairman Kaga · 02-09-2009, 10:24 AM

Shit...I hope Station Casinos don't go down. They're owned by the same people that own Zuffa which owns UFC.

02-09-2009, 10:42 AM

Thanks for the post. It was a great read.

RRxtar · 02-09-2009, 10:51 AM

Quote:

Originally Posted by Chairman Kaga

Shit...I hope Station Casinos don't go down. They're owned by the same people that own Zuffa which owns UFC.

Station Casino's is completely separate from Zuffa. Lorenzo Fertitta gave up his share of the Casinos last year to avoid any future problems. His brother still owns the Casinos but both Lorenzo and Dana White and Zuffa are completely separate. Zuffa has recently climbed out of the red in the last 2 years and is now becoming increasingly more profitable.

Sodium · 02-09-2009, 11:32 AM

Nuwwww I've never been to 6 flags either....=(

hotjoint · 02-09-2009, 11:41 AM

wow krispy kreme huh ? thought they were doing good

unit · 02-09-2009, 12:14 PM

not surprised w/ KK.
w/ obesity considered a disease, and every fast food chain pushing for healthier menus, trends like KK cannot last.

RFlush · 02-09-2009, 12:27 PM

Ya not surprised with kk in this day of age when people are attemping to be more healthier. The HK franchises of KK already went into liquidation last year, but that's a different market

keifun · 02-09-2009, 12:44 PM

hahaha KK..I guess people are realizing that their doughnuts are seriously unhealthy.

As for Sirius/XM satellite radio, I had a feeling they wouldn't last ever since they started. C'mon having to buy their satellite radio reciever and also pay a monthly subscription, when people can just download music for free and burn them onto CDs or play on their iPods.

They only thing I think its worthy from satellite radio is that you can listen to all the games on NBA/NHL/MLB..etc.

InvisibleSoul · 02-09-2009, 02:54 PM

Not sure why Krispy Kreme is such a surprise... there's been news of them doing pretty badly for several years already...

Synaptik · 02-09-2009, 03:23 PM

i hope rainforest cafes don't start closing, i havent finished my collection of cups.

the rest of them have no effect on me aside from overall negative consequences on the economy.

monkeywrench · 02-09-2009, 03:38 PM

krispy kream NOOOOOOOO

RRxtar · 02-09-2009, 03:47 PM

Quote:

Originally Posted by k-fever

As for Sirius/XM satellite radio, I had a feeling they wouldn't last ever since they started. C'mon having to buy their satellite radio reciever and also pay a monthly subscription, when people can just download music for free and burn them onto CDs or play on their iPods.

They only thing I think its worthy from satellite radio is that you can listen to all the games on NBA/NHL/MLB..etc.

Sirius/XM has 20 million subscribers and Sirius alone has 7million subscribers and over 750,000 in canada. and while growth has slowed from its peak they still expect another 2million or 10% more in 2009

i listen to sirius all day at work and hardly any of that is music.

Harvey Specter · 02-09-2009, 04:00 PM

I have Sirius in my car and it's well worth the sub fee. Huge selection of channels to select from.

Vansterdam · 02-09-2009, 04:26 PM

Quote:

Originally Posted by kookoobird88

shit not six flags i really want to go there, the rest i dont care about lol