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Thread of National Business that May Not Survive Coronavirus


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The business model I have a tough time understanding is CVS. When we lived in Cedar Park, you could almost drive a golfball from one location to the other. Building sites and medications alone would have to run in high seven figures for each location.

CHIEF

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CVS work as big pad sites in suburban areas, even close together, for one simple reason---they generate enough money per square foot.  their pharmacies and hygiene stuff pay the nut and the other nick-nacks 'n shit are the added bonus.  And what they overpay for in CBD areas, they make up for in serving as a default grocer for residents.  If you're out in Cedar Park, odds are you're in there for an Rx and some facial wash and tampons.  Maybe you grab some gum at checkout.  Because you're gonna get the rest of your shit at HEB.  But if you're downtown Austin and don't want to pay Royal Blue prices, you're gonna duck in there and grab chips, wine, mustard, couple frozen meals, bottled water 12-pack, etc.  and you're gonna pay a huge premium over HEB because you're not gonna drive out of downtown to go get 10 staple items.  And they're still clearing their G&A nut with Rx and you buying razors and shampoo every 3 months.  Every time I stay in New York, I think I'm gonna get a few days of snacks and sundries at a neighborhood bodega, but I always end up getting shit at Duane Reade.  

 

Anyway, what were we talking about? 

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1 hour ago, Lobo said:

CVS work as big pad sites in suburban areas, even close together, for one simple reason---they generate enough money per square foot.  their pharmacies and hygiene stuff pay the nut and the other nick-nacks 'n shit are the added bonus.  And what they overpay for in CBD areas, they make up for in serving as a default grocer for residents.  If you're out in Cedar Park, odds are you're in there for an Rx and some facial wash and tampons.  Maybe you grab some gum at checkout.  Because you're gonna get the rest of your shit at HEB.  But if you're downtown Austin and don't want to pay Royal Blue prices, you're gonna duck in there and grab chips, wine, mustard, couple frozen meals, bottled water 12-pack, etc.  and you're gonna pay a huge premium over HEB because you're not gonna drive out of downtown to go get 10 staple items.  And they're still clearing their G&A nut with Rx and you buying razors and shampoo every 3 months.  Every time I stay in New York, I think I'm gonna get a few days of snacks and sundries at a neighborhood bodega, but I always end up getting shit at Duane Reade.  

 

Anyway, what were we talking about? 

It always seemed like the ones in Cedar Park would naturally be in competition with each other, the same with the Wachovia banks.

CHIEF

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yeah, banks put each other out of business every week in this country at the CFI level (Community Financial Institutions---think local/regional banks and credit unions).  There's also a massive M&A consolidation of banks going on since post-2008.  You can have some micro market intel on stuff like that, plenty of people do.  What I was attempting to describe, admittedly not very well, is banks that are fine.  The very reason they expanded is because they got great real estate spots but they're becoming to effective online/mobile/etc. that they don't need all the expensive branches they used to maintain, but are healthy in terms of their Tier-I capital/loan activity/etc.  And banks will hide that they're going out of business or being bought. but  right now, they're going through a phase where they are proud to tell their shareholders some version of, "We are healthy, we are heavily mobile now, and we're gonna get lean in terms of real estate leases and staffing overhead."  And you can now corroborate that with their tech/digital/core providers who can tell you exactly how few people are now going into branches and how many are doing it online/mobile.  With a few data points, you can predict with heavy certainty which bank branches are gonna shut down (not the bank itself again, but just 1-2 of their expensive, shitty locales) and you can compare that against how much of that strip center/building is dependent on that bank.  You can short the shit out of that.  Again, not shorting the bank itself, but their leases/the landlords that rely on them.  

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Hertz declared BK on Friday-  not that declaring BK means they are done, but its still a really bad look when they bought out their CEO last year to the tune of $9M to leave.

and they turn around this year and have fired almost 16,000 people with more to come.

 

https://www.forbes.com/sites/jackkelly/2020/05/23/hertz-files-for-bankruptcy-after-16000-employees-were-let-go-and-ceo-made-over-9-million/#357281e22bca 

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Tuesday Morning....come on down.

Dallas-based retailer Tuesday Morning announced Wednesday that it has filed for bankruptcy due to the financial impact of COVID-19. 

"The complete halt of store operations for two months put the company in a financial position that can be effectively addressed only through a reorganization in Chapter 11," CEO Steve Becker said in a news release. 

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On 5/24/2020 at 12:24 PM, AUS-97HORN said:

Hertz declared BK on Friday-  not that declaring BK means they are done, but its still a really bad look when they bought out their CEO last year to the tune of $9M to leave.

and they turn around this year and have fired almost 16,000 people with more to come.

 

https://www.forbes.com/sites/jackkelly/2020/05/23/hertz-files-for-bankruptcy-after-16000-employees-were-let-go-and-ceo-made-over-9-million/#357281e22bca 

The rental car company Hertz gained 115% yesterday, erasing all its losses since it filed for bankruptcy just a few weeks ago.

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I'm glad their falsely traded stock price is healthy again.  But equity gains don't necessarily erase a fucked up balance sheet coexisting up against a disastrous set of real estate legacy leases that look like Enron on LSD.  We don't need to have piles and piles of rental cars in the CBD.  You can just have them come out to you.  But hey, I guess drive-thru banks need something to do with their abandoned teller lanes, may as well park rental cars there until somebody needs one...next month.  

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Not really national businesses, but not local either

So WSJ has an article on businesses that are struggling during the shut down
The repo man, debt collectors, bankruptcy lawyers, auction lots, the bankruptcy trustee office, etc
Banks are extending payment terms, and the businesses that typically get involved in the mess that follows loan defaults are struggling

Not that people typically feel bad about these businesses, but they are all cogs in the capitalist economic machine

https://www.wsj.com/articles/eddie-the-repo-man-has-time-on-his-hands-what-happens-when-your-debt-is-suspended-11592494459?mod=hp_lead_pos10

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  • 2 weeks later...
On 6/28/2020 at 7:34 PM, AUS-97HORN said:

Brooks Brothers filed for bankruptcy, and sounds like they just want to sell the company. I imagine there is some level of value in their name.  They were my go-to office shirts for the past 15 years but now I rarely go to the office so t-shirts get me by most of the time.

https://www.cnn.com/2020/07/08/business/brooks-brothers-bankruptcy/index.html

It could be a good buy for Amazon if they wanted to get into this market and have a presence in some malls and outlets.

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another retailer down the drain.... this time is a complete closure for all stores

Chapter 11, liquidation

 

SteinMart is done    (the sound of hundreds of housewives with nothing to do all just cried out in terror and were suddenly silenced)

 

https://www.cnbc.com/2020/08/13/map-bankrupted-stein-mart-is-closing-279-stores-heres-a-list.html

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Dammit.  I shop at my neighborhood stein mart a few times a year.  Obviously I can find shitty belts and shorts online.  But if they vacate that spot, it’s gonna be an empty eyesore for a decade.  I’m sure my councilwoman will turn it into a homeless encampment.   Yey us!   

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13 minutes ago, Lobo said:

Dammit.  I shop at my neighborhood stein mart a few times a year.  Obviously I can find shitty belts and shorts online.  But if they vacate that spot, it’s gonna be an empty eyesore for a decade.  I’m sure my councilwoman will turn it into a homeless encampment.   Yey us!   

I’m sure our one here on Bee Caves will be empty for a long time. Not too many businesses need that square footage 

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5 hours ago, Lobo said:

Dammit.  I shop at my neighborhood stein mart a few times a year.  Obviously I can find shitty belts and shorts online.  But if they vacate that spot, it’s gonna be an empty eyesore for a decade.  I’m sure my councilwoman will turn it into a homeless encampment.   Yey us!   

Fucking lulz. 

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Glad you find my shopping habits funny, I guess?  I also shop at Ross and TJ Maxx sometimes if you need another good laugh.

I’d give it all up for a trip to Supercuts though, but I don’t feel safe yet.  And apparently they don’t either. I’ve never seen my local one without a full waiting area on the weekends, and I haven’t seen more than one person waiting for a cut in the last two months I’ve driven by.  Kinda strange.  There a disturbing number of out of business salons around Austin despite their initial rush of customers.  

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33 minutes ago, Lobo said:

Glad you find my shopping habits funny, I guess?  I also shop at Ross and TJ Maxx sometimes if you need another good laugh.

I’d give it all up for a trip to Supercuts though, but I don’t feel safe yet.  And apparently they don’t either. I’ve never seen my local one without a full waiting area on the weekends, and I haven’t seen more than one person waiting for a cut in the last two months I’ve driven by.  Kinda strange.  There a disturbing number of out of business salons around Austin despite their initial rush of customers.  

Not funny, predictable and totally in line with your nerd persona. Good day, you fucking goose. 

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I'll give you bonus points for "fucking goose"    that's a new one.  Cheers, good day to you too sir.

  I'll be with the other nerds at Stein Mart for the closing sale. 

Anyway, back on topic.  I wonder what'll happen to the post office next to that Stein mart given the latest mandates from DC.  

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Day Drunk?  Check

50-something?  Not quite yet. 

Over abundance of animal print blouses?  No, but we are willing to learn.

I didn't realize it was a laughable offense to shop there but then, Dr. Beeper is beyond awesomely cool.  I'm sure there's other cool kids shit to laugh at about people that need to save money on staple items.  Y'all let me know when we can frat up and pick on 'em.  

 

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34 minutes ago, Lobo said:

Day Drunk?  Check

50-something?  Not quite yet. 

Over abundance of animal print blouses?  No, but we are willing to learn.

I didn't realize it was a laughable offense to shop there but then, Dr. Beeper is beyond awesomely cool.  I'm sure there's other cool kids shit to laugh at about people that need to save money on staple items.  Y'all let me know when we can frat up and pick on 'em.  

 

Bless your heart. You have no clue. 

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51 minutes ago, Deej said:

"I can't believe they're going out of business. I shop there twice a year."

Like all the Dart Bowl fans who kept them in business by showing up only after they announced they were closing. 

I was a regular at Dart Bowl for many years.  Same with Magnolia Cafe and a number of other Austin institutions.  But yeah, I bought belts and shorts at Stein Mart every so often.  I'm failing to see how I don't do enough to support local Austin businesses.  Directing some investors towards Biderman's in fact, if that's okay with you guys that for some reason crave Rex Kramer's admiration.  

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Just now, Lobo said:

I was a regular at Dart Bowl for many years.  Same with Magnolia Cafe and a number of other Austin institutions.  But yeah, I bought belts and shorts at Stein Mart every so often.  I'm failing to see how I don't do enough to support local Austin businesses.  Directing some investors towards Biderman's in fact, if that's okay with you guys that for some reason crave Rex Kramer's admiration.  

stripes lighten GIF

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20 minutes ago, WBT said:

Steinmart?  Lobo dances on the grave of every brick and mortar and fucking Steinmart is the one that breaks the trend?

Yes, I think the overall model is dying and I think shorting a great deal of it makes sense.  But sometimes people still need a belt.  People hate chain restaurants but still grab some mcnuggets for their kids.  I certainly know branch banking is dying, but even with digital capture/fintech/etc......I think some of us have popped in twice a year for some in-person banking, no?  If it's completely binary with every single adult in the nation...let me know and I'll adjust accordingly.  

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AUS-97 brought up Steinmart.  I replied to it, pretty basic.  And like clockwork Rex shows up to say something sassy about an otherwise innocuous post, but yeah...I shoulda let it go.  

I thought this was strange for the Statesman to report on Thursday:  https://www.austin360.com/entertainment/20200813/lubyrsquos-cafeteria-on-brodie-lane-has-permanently-closed-after-28-years

It's been closed down for months with giant neon "AUCTION" signage all over the store and parking lot.  I guess the reporter working the coronavirus closures also got the protest/police beat and had been overwhelmed.  I don't see how any buffet/cafeteria restaurant(even if served by employees) makes it out of this pandemic.  I guess Pappas Bros. can still keep them afloat with cash, but not for that long.  in local news, Austin Java is closing all stores and campus bar hangout "Dive" closed permanently.  Always liked that place.  

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16 minutes ago, Incredulity said:

I imagine anything relying on a salad/food bar is not generating the same customer traffic these days.  Having someone else pick it for you seems unworkable.  Speaking of which, how is Fogo de Chao doing?

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Of all the "Hey Farva, what's the place you like with the mozzarella sticks and goofy shit on the walls?" restaurant chains (Applebee's, Friday's, Bennigan's, Chili's, et. al.)...Ruby Tuesday had the most edible food. 

Abuelo's has also begun a massive store shut-down campaign. I doubt they survive this.  I was just getting to be a fan.  It's crap chain Mexican food in a town full of great local joints...but we started patronizing them over the summer because they had a massive outdoor patio that was often empty except for our table.  All my other haunts have 4-6 tables so there was no way to social distance or they were just too long of a wait time.  

I was noticing another slew of out-of-business signs on Brodie Lane the other day and it raised a question---those little "Cities" like Sunset Valley and Bee Cave.......would a significant enough shutdown of their retail and restaurants be enough to "close" an entire town like theirs?  I mean that's where all their revenue comes from, sales tax at those stores and property taxes from those restaurants.  Bee Cave at least has some residential tax base to draw from, but not SV.  And every large American city has a Sunset Valley or Bee Cave within its borders or immediately adjacent.  Some officially domiciled "City" that's just 500 apartment renters and then 5 big strip centers, a dozen restaurants, and a movie theater.  You take away their sales and property taxes...what do they have left to function with?  Sunset Valley wouldn't need that police department, which are effectively just parking lot security.  It'll just be Home Depot, the apartments across the street, and the AISD Burger Center. But there are several dozen of these "Retail Cities" across the nation.  And then you also have those interstate "Cities" that are just there for long strips of car dealerships or Outlet Malls.  What'll happen to those tax zones when this virus is over and we realize there's no need to drive all the way out there for shit we can do online?  

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