Calmly Stalking a Turnaround
September 13, 2009-- Home Textiles Today,
This week's market marks the anniversary of the week Wall Street went kaboom. As September market 2008 got underway, Lehman Brothers collapsed, a tottering Merrill Lynch was soon to be thrust into the arms of Bank of America, and credit across the financial sector quickly evaporated.
That week, the Linens 'n Things buying group attempted to convince suppliers to keep selling the company, by then operating in bankruptcy. Those efforts were seriously impeded when The New York Post came out with a report that equity fund Cerberus Capital would take a pass on the proposed debt-to-equity swap among secured noteholders that was key to LNT's immediate-term life support.
The market was still digesting a glut of Dan River goods that had been on the dock, on the water or in the pipeline when owner GHCL abruptly shut down the division five months earlier.
Mervyns, which had already begun closing stores and had been cut off by many suppliers, would soon announce its liquidation.
Here we are a year later, minus several thousand retail doors and some once formidable accounts. Back-to-school got started late, may or may not be done, and did not demonstrate a renaissance in unrestrained consumer spending. Retailers are being responsibly prudent about fourth-quarter inventories, preferring to leave dollars on the table (if it comes to that) rather than clearance items on the shelves.
In other words, we've seen worse.
I'm surprised we have not lost more suppliers over the past 12 months, although there have been substantial layoffs and at least a few companies are hanging on by a thread in hopes of better days (and freer capital). They desperately need retailers to have a promising fourth quarter.
Nonetheless, the mood going into New York Home Fashions Week seems pretty fair, I would say soberly optimistic. Now, people are usually feeling positive when market rolls around, even as they complain about the business. As unsettled as the economy was during the spring market a few months ago, the mood was still upbeat and determined — nowhere near as grim as it was during the 2001–2002 recession, surprisingly.
The good news is things have nowhere to go but up. The question is, when do we start climbing?
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