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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, Michael Knight said:

 

Great idea for Amazon. lower shipping costs. Get people to drive to their stores instead.  What's old is new.

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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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I'm not sure I'd equate filing Chapter 11 with going out of business, even in these times.


Pat Sajak taught me that bankruptcy means you have zero dollars.

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And that you can put the rest on a gift certificate for later.  

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