Macy's, Hertz destined for bankruptcy?

[marmar]

via Yahoo!:



Ten Big Companies That Are Veering Toward Bankruptcy
Posted Sep 18, 2009 12:21pm EDT by Vincent Fernando and Joe Weisenthal in Investing, Media, Products and Trends, Recession

From The Business Insider, Sept. 18, 2009:


Despite a few green shoots in the economy and a rocketing stock market, many large companies are still struggling to avoid bankruptcy.

A new report by Audit Integrity identifies some high-profile names "that have the highest probability of declaring bankruptcy among publicly traded firms."

Which companies appear the worst off? We took the list and removed any company with a market cap under $3 billion. We then ranked the remaining names by a simple measure of the market's perceived bankruptcy risk - Market Cap (MC) divided by Enterprise Value (EV). The less MC vs. EV, the less residual shareholders' value (above what debt holders can claim) the market is pricing-in for the company. Thus a lower MC/EV means the market thinks the company is more likely to go bankrupt.

1. Hertz
When you have tons of debt financing your fleet of cars, falling rental demand really hurts.

While the company raised new capital in May for some breathing room, Fitch and Moody’s actually cut their ratings for the company in July.

Ignoring the downgrade, shares kept rallying and are now at over five times the March $2 low. Best of luck.

Market Cap (MC)/Enterprise Value (EV) = 32%

2. Textron
What a tough time to be selling business jets.

Textron wrote down $2.3 in its backlog this year after it cancelled a new jet design, and demand for its other aircraft-related offerings has plummeted.

Shareholders may be heartened by the company’s ability to push back some debt maturities lately, but deteriorating credit quality at the company’s leasing arm makes the outlook uncertain at best.

MC/EV=39%

3. Sprint Nextel
Sprint Nextel is bleeding customers, and could lose as many as 4.4 million net post-paid subscribers this year.

This is a huge problem when you have large amounts of maturing debt over the next few years.

A recent Deutsche Telekom acquisition rumor offered some hope, but that appears to have faded. Facing a difficult road ahead on its own, the company better keep its lawyers on speed-dial.

MC/EV=41%

4. Macy's

Does anyone even shop at department stores anymore?

Same store sales will likely keep falling at Macy’s right through 2009. With $2.4 billion of maturing debt over the next five years, the company is trying to cut costs, and has already reduced its dividend.

Hopefully the US consumer will bounce back soon, and actually want to shop at Macy's.

MC/EV=47% ............(more)

The complete piece is at: http://finance.yahoo.com/tech-ticker/article/336235/Ten...

[seafan]

1. A couple more at risk, according to Yahoo:

Ten Big Companies That Are Veering Toward Bankruptcy


September 18, 2009


(Interesting phrasing in these two..)

.....


6. Goodyear

Demand for Goodyear tires has sunk, and the company is saddled with massive debt and pension obligations.

It doesn’t help that The United Steelworkers union prevents the company from proper cost control by forcing factories to stay open.

Shareholders have to wonder how much value will be left of the company after bondholders and the union members have their way.

MC/EV=53%

7. CBS

Weak advertising and falling license fees have sent CBS's earnings off a cliff in 2009.

If they remain depressed for too long, the company could have trouble refinancing $3.2 billion of debt coming due over the next five years.

It will really come down to whether or not CBS’s earnings collapse is merely cyclical, or the result of structural trend whereby traditional TV is dying.

As a business blog, we can't help but feel partly guilty here.

.....

A whole lot of changes are comin'.

[Deja Q]

21. I thought goodyear was going down because of tire recalls and lawsuits

The pension "obligation" is NOTHING by comparison. Their workers paid into it, they deserve it back.

[Kingofalldems]

2. Macy's recently took over the Hecht Co. stores, what gives?

[marmar]

3. They took over a bunch of regional department store chains, such as Marshall Fields...

(Much to the chagrin of Marshall Fields customers)/

All of those takeovers have given Macy's and its ultra-bland product line indigestion.

[Loge23]

5. Ditto for Burdines in Florida

In Florida, we now have a Macy's in just about every shopping center.
Swimwear starts disappearing in July. Racks full of leather coats start coming in.
Duh! It's warm in FL all year!
Funny how such a successful brand can be so stupid!

[FLAprogressive]

26. lol yup.....I miss Burdines! They used to have a restaraunt which is now the Macy's mattress.....

...department at the Sarasota Square Mall.

[cbdo2007]

10. They took over the Jones Store here in Kansas City and I haven't been back since.

I used to shop at The Jones Store a lot as they offered quality clothes at a great price. It's not the same under Macy's so I don't go anymore. I'm really not surprised they're heading toward bankruptcy as they aren't giving us the service and values we were use to.

[Romulox]

11. Marshall Fields had itself previously destroyed Dayton Hudson's.

A lot of Marshall Field's aficionados don't seem to get this...

[marmar]

15. I know that.....Just citing the most recent takeover, n'est-ce pas?

[queenjane]

30. Shopped at Hechts ALL the time - Macys, never

Hechts had a great range of clothes, both styles & prices, great sales, deep clearances. Store here in Durham was packed all the time, any time of day. Now,when I have the misfortune of walking through Macys to reach another store, I can hear crickets. The clothes are ugly and over-priced. They no longer sell furniture. Housewares are too high end and pricey. I can't believe this store is still in business. Feel sorry for the employees, but couldn't care less if they close. They devoured my beloved Hechts!

[KharmaTrain]

4. January Will Be A Bloody Month

I keep close track on the fate of the broadcast industry...not a pretty sight. One company, Citadel, missed a major payment the other day and appears headed to a major liquidation if their next payment (in January) defaults. Their problem is they can no longer "downsize" their way out of this mess and have few assets to sell that would meet their nut (also few if any buyers)...rumors are rampant of other companies stepping into buy up this company but why should they as the company's values and fate sink lower and lower. And there are several other companies in similar straits. Sirius/XM just got a nasty letter from NASDAQ the other day that if they don't raise their stock price soon they could be delisted that would surely lead to their bankruptcy. Not a pretty picture out there.

Sure the market is rebounding. As an investor, I'm enjoy a nice year, but it's based on companies that either got government bailouts (ya really wanna know where most of that bailout money is going?) or coroporations that fired thousands and the stock rises. But that's a different economy than a majority of the people deal with. On the retail and consumer end, it's still Death Valley...high unemployment, the credit crunch and fears of the future continue to haunt almost every sector of the economy and until that situation is rectified the "recovery" will be painful and slow. Much of this was caused by years...even decades...of defecit spending by large corporations that always could find a bank to bail them...the gravy train has ended, reality is sinking in and sadly it's those who can least afford it who are hurt the most.

[Loge23]

6. The best way to rent at Hertz

is on Priceline. You have to be nuts to pay the Hertz rates as advertised.

[Botany]

7. @ one time there were many Department Stores that reflected their .......

..... communities and gave people a sense of place but w/ Macy's taking over all of them nationwide that
important value was gone and the downfall of Macy's is just a matter of time. Rikes, Shilito's Dayton's,
Lazarus, Gimbel', Higbee's, Kaufman's, and so on all gave people a sense of Community and w/ that
the stores got some customer loyalty too.

[Terry in Austin]

14. Mm-mm, Frango mints!

Best thing ever to come out of Marshall Fields.

[BanzaiBonnie]

8. The chances of me shopping at Macy's are slim to nothing

They bought out Meir and Frank stores and I'll not forgive them for that.

[FarCenter]

9. Saw an analyst on TV recommending Macy's

Said that Macy's has centralized operations from four regional offices to one. This will result in a reduction in adminstrative overhead and better stocking of the stores.

[marmar]

16. Generic centralized stocking of their stores......I think that's one of their biggest problems.

nt

[Romulox]

12. I would love to see Macy's go under. I disagree with the entire concept of their store.

Every Macy's I've been to has had the men's clothing in the basement, for example. No thanks. I just won't bother going to such a place.

[RobinA]

19. You LIke

to see hundreds of people lose their jobs?

[Romulox]

22. That's *supposed* to be how the "free market" works, no? nt

[wisteria]

20. You want to see them fail because a few stores have basement mens departments?

The store near me has a very nice mens department up on the second floor.

[Romulox]

23. Yes. I would like to see a store I don't like replaced with something I do.

Shocking, I'm sure.

[Beacool]

24. The one's in my area do not have have the Men's department in any basement.

They are very nicely appointed and quite large with clothing choices from conservative to young men's.

Regardless, Macy's hires thousands of people and are part of our history. I still miss Gimbel's in NY and my mother decries the loss of Woolworth's. I forgot to add, it was a great loss to Philadelphia when John Wanamaker closed its doors.

[Romulox]

25. That's just it--Macy's is NOT part of my community's history. They bought out other stores.

I'm sure the ones in NYC are nice, but they've really hurt many of the chains they've aggressively bought out.

[cbdo2007]

13. and Sprint is bleeding customers due to their customer service.

I'm here in Kansas City where you think we would support the local major corporation. I know lots of people who work at Sprint but no one (besides the people who work there) that use Sprint as their cell phone carrier or for anything else. They have the worst customer service of any company I've ever dealth with in the past and are just considered a joke within my friends/family for their lack of desire to keep their customers.

[Loge23]

17. Sprint is almost legendarily bad in FL

There was a time - not so long ago - when Nextel phones were everywhere in FL.
But many users quickly found out that the service was very bad - just the basic phone service!
Now very few are still w/ Sprint comparatively.

[DefenseLawyer]

18. As a casual traveler

It always seemed that Hertz set their prices very high and relied upon business people with vast expense accounts who didn't particularly care what they were paying. They certainly never seem to be even trying to compete on price. My guess is there are a lot more companies paying attention to those expense accounts these days.

[FLAprogressive]

27. nice bit of union busting in the article

6. Goodyear

Demand for Goodyear tires has sunk, and the company is saddled with massive debt and pension obligations.

It doesn’t help that The United Steelworkers union prevents the company from proper cost control by forcing factories to stay open.

Shareholders have to wonder how much value will be left of the company after bondholders and the union members have their way.

MC/EV=53%

----

just like with the auto bailout, blame the unions + workers......

[Last Stand]

28. Hertz can crash--they're in the business of screwing people.

My bill was only double what it should have been. Still fighting it.

It'll be the last time I patronize that company and I'm sure I'm not the only one who's had this problem. Karma's a bitch.

[Zomby Woof]

29. Macy's: overrated and overpriced

Just like Nordstrom, people are shopping there because of their NAME, and they take the extra hit in their wallet as a result. Much of their overpriced shit can be found much cheaper elsewhere.

So if they are going under, they brought it upon themselves in this economy.