Saturday, October 3, 2009

Fool me once, shame on you!, Fool me twice, shame on me!

While the Midas President was off to Copenhagen to touch the International Olympic Committee with his “rock star status” and his fashionista wife giving her impassioned “my father had MS” speech another one of those pesky unemployment reports came out. This is another area that Mr. Mida’s touched in early February telling the rubes that we needed to act quickly in order to pass the “not so Stimulus bill” in order to curtail the unemployment figures to a mere 7% (if passed) or we would face 8.5% if we do nothing.

The report that was just released while the Obama’s were enduring great personal sacrifices traveling abroad (per Michelle Obama) the national unemployment rate was topping 9.8%.

Getting back to the “Midas” touch Obama assured the American workers that the stimulus would in fact create or save 3.5 million jobs, yet since this proclamation we have seen an average of 500,000 jobs per month decline.

Mr. Midas has moved on to the “Health Care” crisis (after all a crisis is too good to waste) and has told us the system is broke and millions will die as a result if we do not pass this reform bill. The American public is now wary of Mr. Midas. We, the American public, like our health care just as it is thank you Mr. Midas. In fact, during the last decade up to and including today it is the only sector of our economy that is showing a continued growth in jobs and profitability so we are asking ourselves just where the “crisis” is?

Shifting his “midas” touch, Obama is now attempting to link the passage of his “healthcare bill” to creating new jobs. Say what?

According to the above article:
“If aspiring entrepreneurs believe they can stay insured while switching jobs, Obama said, they will start new businesses and hire workers.
“Obama said he has met people "who've got a good idea and the expertise and determination to build it into a thriving business. But many can't take that leap because they can't afford to lose the health insurance they have at their current job."
Small businesses create many of the nation's jobs, Obama said, and some have the potential to become big companies.”

The first "fatal flaw" to this reasoning is an academic one as more people are losing their jobs coupled with the "downsizing" of major companies -- those who have jobs are HOLDING ONTO THEM and have little or no chance of, or thinking about, switching jobs in this economy!

So let us take a look at some big companies that Mr. Midas indicates have the potential to become. The lists of companies I have listed below have reported to the “financial street” the number of stores that have closed and will close in fiscal year 2009:
Rite Aid – 117
Jo-Anne Fabrics – 30
Ritz Cameras – 300
Gottschalks (Department Stores) – 58
Snyders Drugs – 17
Chico’s – 25
New York & Co. – 50
Filene’s Basement – 11
Bruno’s – 10
Jimmy’z – 11
ZGallerie – 25
Bassett Furniture – 8-10
Sam’s Club (Canada) – 6
Gap – 100
Bealls – 12
Kira Plastinina – 12
Claires – 119
Famous Footware – 30-35
S&K Famous Brands – 30
Oneida – 20
World Market – 26
Sweetbay Supermarkets – 8
Goody’s Family Clothing – 282
Cub Foods - 50
Yankee Candle – 28
Calvin Klein, Van Heusen, Izod – 175
Iredesse (Tiffany’s) – 16
Sportsman Wearhouse – 23
Ruby Tuesday – 70
American Greetings – 60
Circuit City – Entire chain
Home Depot Expo Design Centers – 34
Macy’s – 11
Ann Taylor – 163
Starbucks – 600
Pier 1 Imports – 60
Chrysler – 1 in 4 nationwide
General Motors – 1000
Boaters World – 129
Ruehl Stores – 29
Advance America Advance Cash Centers – 60
Jones Apparel – 225
J Jill - 75
Zales – 191
Samsonite – 85
Kmart – 22
Sears – 6
PacSun – 40
Bank of America – 610
Smith & Hawken – 56
Blockbuster Video – 810-960
Payless Shoe Source – 17

The total retailer stores that are shuttering in 2009 are 6109! When you think about a single small retailer footprint (square foot) like starbucks, who averages are around 700sf per store, they employ roughly 5-6 store level employees. When you look at an “Anchor” store like Macy’s, Rite Aid, General Motors, etc., the number of store level employees can reach upward of 100.

Note: The list is only a sampling of “national or regional” retailers who have made announcements so the number of retailers who are “downsizing” is potentially much larger.

The job losses that result in a store closing do not stop at the store level. For instance, using Starbucks as the example again, they announced over 600 stores to close and at the corporate level there will be support staff (accounting, payroll, security, regional sales managers, etc) that will also lose their jobs as the company’s stores regional maps change to reflect the closings. Regional sales managers at national retailers have an average of 10-15 stores that they are directly responsible for, so when starbucks announces 600 stores closings, the net result of regional sales manager job losses are roughly 60. Then, if you lose 60 regional sales managers, then you will also lose those Regional Vice Presidents that supervise them, etc, etc.

Like the title of this article is “Fool me once, shame on you” indicates, we will not be fooled by the shifting arguments of Mr. Midas when the previous arguments failed to advance his job killing plans for us all.

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