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Jennifer Marks

Smart People Don't Panic

There's a lot that's scary about the Linens 'n Things liquidation. The fact that a chain that just a couple of years ago generated $2 billion in revenue basically collapsed. That 589 stores are dropping off the map. That an estimated 8,000 people are suddenly without a job in a terrible economic environment.

The scariest part was that in notifying the bankruptcy court in Delaware that LNT was planning to go into liquidation, one of the attorneys explained the company wanted to get out ahead of an anticipated wave of retail bankruptcies.

If that wave comes ashore, I think it is more likely to be populated by independent retailers — bad news for suppliers who've avoided the boom-and-bust pitfalls of servicing the larger volume retailers.

But what's most worrisome is how the mistrust is spreading everywhere. Last week at a Wachovia investor conference, Bon-Ton's ceo made a point of dispelling rumors that his company has financial problems and said he had no idea how the rumor got started.

I have no idea either, but I remember the first time I heard it. It was back in April when a lot of vendors had just decided to stop shipping LNT. Both vendors who mentioned Bon-Ton "trouble" acknowledged that neither one of them actually did any business with the department store. For the record, none of the Bon-Ton vendors I spoke with during market week last month reported any problems with the company.

Unfortunately, in a toxic environment everyone starts looking around the corner for the next calamity. I visited with a company a couple of weeks ago whose execs said the biggest decision they're making every day is figuring out who to ship, who not to ship, and how much to ship. I don't blame them. "Who's next" is becoming a familiar refrain.

The misinformation loop isn't restricted to the trade. The other morning on Bloomberg Radio I heard a retail analyst advising consumers not to holiday shop early because she predicted there were going to be a lot of sales late in the season. Is she nuts? Does she not realize retailers are holding their inventories very low? Or does she not know that most last-minute "sale" prices are already cooked into the order?

But that's where we stand these days. So now might be the time to remind everybody that there are a lot of smart people in this business — never mind the many jokes the industry likes to make at its own expense. Most of the retailers and suppliers now in business made it through the 9/11 economic fall-out and subsequent recession. There are many still standing that saw their way through the economic fiasco of the 1970s. And there are even a few that survived the Great Depression.

Panic is a natural human reaction, but it solves nothing. I'm betting on the smart people to hold their own while the times are tough — and to absolutely tear it up once the economy starts improving. Go get 'em.

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