Chief financial officers were having a harder time getting funds to run operations even before the near-complete restructuring of Wall Street and the freezing of the credit markets over the last month.
Forty-one percent of financial chiefs at U.S. retailers said they experienced a tightening of credit from their lenders, according to a study by accounting and consulting firm BDO Seidman LLP. Nearly a quarter — 24 percent — reported broader use of pink slips and said they have had or plan to have significant staff reductions this year.
Other findings of the most recent survey include:
• 36 percent of retailers already have or plan to close stores this year.
• 77 percent have not or do not plan to delay store openings.
• 91 percent of retail cfo’s said the weakening dollar has not increased their concerns that they might be acquired by an international entity.
The study was based on a telephone survey of 100 cfo’s at retailers with revenues of more than $100 million and was conducted in August and early September.
“They’ve seen even more credit tightening [over the last month],” Catherine Fox-Simpson, a partner at BDO Seidman, said, who noted some of the statistics would probably spike if the survey were done again now.
Markets for short- and long-term debt have become hard to tap and banks have become much more cautious or have even gone out of business or been acquired over the last month as investors, banking executives and lawmakers wrangle over how to clean up billions of dollars of questionable mortgage debt and other toxic credit instruments.
“Definitely the purse strings are a little bit tighter,” Fox-Simpson said. “If you’ve got a rocky earnings history or slim margins and there’s been concern for some time about your viability, I’m sure it’s hard to get credit.”
Cutting costs, such as through reductions in seasonal and non-seasonal workforces, is one of the key tools retailers have at their disposal in such illiquid times. Department store jobs fell sharply last month, according to the U.S. government, and employment in the sector trailed that of specialty stores for the first time in almost two decades.
“You want to demonstrate to your lender that you are being proactive and you are managing cash wisely,” said Fox-Simpson.
Retailers have also cut back on the goods they carry, with the survey finding 37 percent of them reducing planned inventory purchases this year.
Financial chiefs play the key role of point person with increasingly skittish lenders. They are being forced to learn new skills as they navigate their way through the financial crisis.
“This would be a completely different environment than they’ve ever functioned in before,” she said.
The market upheaval has also made for a flight from green issues to greenbacks.
Last year’s study found cfo’s were focused on environmental issues, higher energy costs and, after a spate of safety recalls on Chinese made goods, product quality.
“Companies have clearly turned their focus from more sustainability and green-type issues to staying afloat,” said Fox-Simpson. “This is a very critical time. When your bank goes under, it’s just not something you’re expecting.”
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast