After the holidays, filing bankruptcy may be only option for many retailers

Visual confirmation of this can be found at most major retailers, including Hobby Lobby. A quick visit to the retailer of art supplies, holiday decorations and crafts suggests that they are holding much lower inventory levels this year, as compared to last. Normally, Hobby Lobby is loaded with merchandise, but it seems quite low this year, and it looks like popular items, once sold, will not be restocked for the very reasons mentioned above. So, if you’re waiting for the last minute to pick up some popular gift and hoping it will be discounted, you risk the possibility that it will be sold out and unavailable, as retailers will not be reordering mid-season. And even if they chose to reorder, the manufacture may not have any inventory to send.

It was Gerald Celente who has suggested that shopping malls will become ghost towns. Perhaps this is how the overt collapse in commercial real estate may be triggered. If retailers can’t deliver this season, they will have no choice but to bail on landlords. The landlords will subsequently lose their ability to service their debts and the CRE meltdown may begin. There may be a delay of course, as a CRE meltdown will likely lag bankruptcies and not be felt until later in the year. Look for bankruptcies as early warning indicators for problems in commercial real estate.
Read entire article