Shoppers walk though an elevated walkway at Nordstrom's flagship store in downtown Seattle. Nordstrom says it's temporarily halting an exploration into taking the company private. The retailer said that a group that includes several members of the Nordstrom family plans to resume looking into a possible deal after the holiday season endsNordstrom, Seattle, USA - 13 Sep 2017

Although the c-suites in fashion and retail are often led by big personalities, there’s usually very little confusion over who’s really in charge — the stockholder.

But that might be changing now as share prices wallow and the power of the debt market comes to the fore.

Just ask the Nordstrom family, which this week shelved plans to take Nordstrom Inc. private until after the holiday season.

The company is widely hailed as well-run and the strongest of the department store bunch, but would-be lenders proved too skittish to back the buyout right now, which would have required Nordstrom to take on up to $7 billion in debt. That’s in large part because retail is still grappling with Amazon, slowing mall traffic and a general apathy toward shopping.

That existential onslaught — and the lost sales and profits it has generated — has given more influence to debt holders, including suppliers who offer stores trade credit.

“The first news of any concern or ripple in results triggers a much bigger response from both [lenders and suppliers] than it used to,” said consultant David Bassuk, managing director at AlixPartners. “The pressures are more intense these days for retailers and therefore it really comes back to retailers managing realistic scenarios to make sure they are able to deal with those pressures.

“Many retailers have their upside scenario; the downside scenarios aren’t maybe quite as dire as they should be,” Bassuk said.

That singles out an important cognitive disconnect between creditors and retailers — where store operators are generally looking to build for future growth, lenders are more cautious and want to ensure the company is still there to pay back their loans, with interest.

Stocks and growth are still important and to a certain extent, the equity and the credit markets have been spooked by the same uncertainty. But the voice of the lender is being heard louder.

“The ability to do a transaction has become more difficult in retail/consumer because the debt markets don’t have confidence in the longevity of the models,” said Shyam Gidumal, Northeast consumer products and retail market segment leader at consultancy EY. “They’re only willing to give you debt for runway that they can see and the runway that they can see is shorter.”

In some cases, Gidumal said, retailers are more comfortable with their debt loads than their lenders are and the two groups have different ideas on the best way to right the businesses.

“The retailers have always fixed their problems by finding better product and merchandising it better,” he said. “So a lot of them are trying that as a solution and it’s not a solution that’s giving the debt markets any comfort.”

Monica Aggarwal, managing director and retail sector head at Fitch Ratings, said midtier apparel and accessories retailers are being hit particularly hard by changes in the marketplace.

Aggarwal pointed to “the shift to online and value oriented types of concepts, whether it is off-price, fast-fashion, discount and online. We’ve also talked about a shift in spending toward services and other areas.”

All of that has many retailers, including Nordstrom Inc., Macy’s Inc. and Kohl’s Corp., spending to retool. She noted that those companies have seen their margins on earnings before interest, taxes, depreciation and amortization contract by 300 to 400 basis points over the past few years to around 10 to 12 percent.

And that, especially when combined with still-slow sales, makes it only harder for retailers to manage their debts.

Worries about retail’s future might well make the refinancing of a strong company more expensive — or a potential buyout harder, as is the case for Nordstrom — but the creditors have the greatest sway at companies where they have the greatest presence.

That included a rash of companies that went bankrupt this year, including The LimitedWet Seal and BCBG Max Azria Group, Rue21, True Religion, Gordmans Stores, Agent Provocateur and Sears Canada.

Others that are still plugging away, but seen as at risk, include Bon-Ton Stores Inc., which has a market capitalization of just $7.3 million — the stock closed down 3 percent to 33 cents Tuesday — but is carrying a debt load of $986 million, or 9.1 times EBITDA, according to S&P Capital IQ.

Robert Schulz, lead retail analyst and a managing director at Standard & Poor’s, said: “The equity market and the capital markets, in terms of perception of retail, is pretty negative. It’s almost across the board in some sense. It’s not a top priority where people want to point their money.”

Schulz said companies with strong credit ratings are still able to balance growth and changes to their footprint and keep creditors comfortable, but that firms with weaker credit “have to be a little more prudent.”

Some companies carrying the heaviest debt loads picked them up in private equity buyouts that were structured assuming a retail growth rate that hasn’t panned out. They include some darlings of years past that were loaded up with debt in private equity takeovers, such as Neiman Marcus Group, with total debt of $4.7 billion, or 12.1 times EBITDA and J. Crew Group Inc., with debt of $1.7 billion, or 11.7 times EBITDA, according to S&P Capital IQ.

They have no public stock, but plenty of debt and are being watched closely by credit rating agencies and investors.

Nobody, it seems, can afford to ignore their lenders.

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