A Holiday Shortfall Could Bring Catalog Carnage

Two Weeks Before Thanksgiving, some industry financial experts were already declaring the holiday season a bust. Part of that was the November announcements that Talbots was selling J. Jill and electronics merchant Circuit City was filing for Chapter 11 bankruptcy protection — not a great sign of things to come in January.

“This Christmas season is shaping up to be a horrible one, so there will be a lot more victims of the economy along the path,” says Stuart Rose, managing director for investment bank Tully & Holland.

“It’s a terrible environment for retailers,” echoes Richard Kestenbaum, principal at financial advisory firm Triangle Capital. The ongoing credit crunch means struggling retailers can’t get the funds they need to get through this rough period.

Banks are clamping down on their lending, Rose says, “and that’s going to force a lot of retailers into making some hard decisions.” He says his company in mid-November had to turn down some struggling retailers who were looking for financial help.

Rose thinks it may be liquidators like SB Capital Group or Gordon Brothers Group who step in and bail out the likes of Circuit City come January.

“Whatever they can get is better than not getting anything at all,” Rose says. “Maybe even someone like [private equity firm] Sun Capital will buy a J. Jill, or a firm that buys troubled assets when they bottom out with the hopes it can turn a profit.”

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