Saturday, December 20, 2008

Why open now?

I spend way too much time trying to figure out other people's motivations, which is probably pointless and impossible.

Still, as a general rule of thumb, if it doesn't make sense to me, that's usually a sign that there is something wrong.

Such as Gottshalks building and opening a big box store in Bend at the very beginning of a deep recession.

Must mean they're doing pretty good right? Lots of faith in the local market, heh?

From a site called the Tulare Business Journal:

Gottschalks (Pink Sheets: GOTT) tumbled deeper into penny-stock territory Friday morning after a Chinese company backed out of an agreement that would have given the troubled retailer a cash infusion of up to $30 million.Gottschalks traded as low as 14 cents per share Friday morning, down 69 percent from Thursday’s close of 45 cents. That broke below its previous all-time low of 22 cents per share set Nov. 21.

The latest selloff gave the company, which has annual sales of almost $600 million, a market valuation of less than $2 million.Gottschalks, which operates 59 department stores and three specialty stores in California and five other Western states, has lost $32 million in the past seven quarters, including almost $20 million in the first three quarters of this year, as a result of the tough economy and questionable strategic moves.

Industry analysts are now pondering the immediate future of the retailer. If suppliers who were bolstered by the deal's prospects cut Gottschalks off, it could be forced to begin a liquidation with closure sometime next year, said Howard Davidowitz, chairman of Davidowitz & Associates, a national retail consulting and investment banking firm in New York.

"Gottschalks needs divine intervention," Davidowitz said. "They are in a very tough place."

8 comments:

BilboBend said...

Google COVA, or CORA, or COBA, and you'll find 'why now'.

Bend will be immune from the depression.

We have a diversified town of tourism, high paying jobs, and retirees.

Bend is Aspen, Bend is a resort town, Bend is the only resort near the west coast. People want to live and shop in Bend.

Have you not visited the COVA taxpayer subsidized site??

http://visitcentraloregon.com/

tim said...

The fact that they built in Bend after the bubble shows how lousy a business they are.

I had never even heard of them until they opened. I still haven't been in there.

Has anyone?

Quimby said...

>> Has anyone?

Yeah, went in there looking for a specific type of jeans. No dice. Looks exactly like a Macy's.

Baffling they'd open here.

Leitmotiv said...

Duncan,

Lately, it seems you're not pessimistic enough. I've been hearing from several sources that it might be the GREATEST Depression instead of a "deep recession." What's your thoughts?

Duncan McGeary said...

Next year, my friend. Or at least after Christmas.

But I'm breaking out my sackcloth and hand lettered, "The End is NIGH!"
sign. I just don't want to pour ash over my head until then...

Duncan McGeary said...

"The fact that they built in Bend after the bubble shows how lousy a business they are."

Tell that to Kohl's, Tim. Rumor is they're going ahead. In the same complex as the Office Depot is going out.

That just seems......willful.

Duncan McGeary said...

Ditto Olive Garden.

But I've always maintained their all Ponzi schemes. Build new, build more, pay later.

RDC said...

I do not expect Gottschalks to survive very far into 2009. I expect them to go BK before the end of Q1 2009