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Inside Retail (Apr 24th, 2017)

Showrooms may be the next big trend in retail strategies for brick-and-mortar stores trying to keep customer traffic up. The concept resembles the model used by mattress, furniture and automobile companies that offer customers a way to see the merchandise in person, but have their products delivered to their home. Many consumers are already using apparel stores in that way by looking at the clothes in the stores, then scouring for deals online. E-commerce retailers could also benefit by starting showrooms. In fact, firms selling primarily online can boost their sales by five to eight times with a physical presence that allows customers to see and touch the products, said Andres Mendoza-Pena, a partner at A.T. Kearney, a retail consulting firm.  – RETAIL DIVE

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Neiman Marcus is trying to stay liquid by borrowing money to make its interest payments. The luxury retailer has opted for a payment-in-kind option on $600 million in 8.75 percent notes, meaning it is taking on extra debt to pay its bills. Like many retailers, Dallas-based Neiman is struggling with plummeting sales. “Trends such as weak mall traffic, highly promotional retail apparel environment and cautious consumer spending continue to weigh heavily on Neiman Marcus,” S&P Global Ratings credit analyst Helena Song said. – MARKETWATCH

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Wayfair Inc.'s (W) business model is unsustainable, says Citron Research analyst Andrew Left, a notable short-seller. “The accounts payable, the cash flow, the business model – it’s stupid,” Left told Real Money. “They’ll never make money.” Left points out that Wayfair’s accounts payable is about 50 percent of its total assets and exceeds the company’s cash on hand and revenue. Furthermore, Wayfair’s accrued liabilities boosted its operating cash flow and without it, cash flow would be negative, Left said. Finally, Wayfair relies on an old model of manual accounting, which is unusual for a retailer of its size that would typically be using an automated system. Left drew comparisons to convicted Ponzi schemer Bernie Madoff, who also used manual controls for accounting. – REAL MONEY

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Sears Holdings Corp. (SHLD) has named its second chief financial officer in less than a year, a turnover that comes amid a difficult time for the department store chain. Robert Riecker, previously controller and head of capital markets activities, will take the lead finance position. He succeeds Jason Hollar, who took the position in October but resigned to "pursue another career opportunity." Sears has reported a loss for six straight years, leaving the company to admit it may not survive. However the company said it expects to post a profit for the first three months of this year, thanks in part to the recent sale of its Craftsman brand. S&P Global Markets says Sears tops the list of retailers most vulnerable to defaulting on debt. “The shift to online shopping has left a lot of financial distress in its wake, especially for brick-and-mortar retailers like Sears,” said S&P Global’s director of risk services Jim Elder. – WSJ

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Bebe Stores Inc. plans to close all of its stores by the end of next month. The California-based apparel chain said it will sell off all its store inventory, but it did not say whether it plans to continue operating its website. It operates 134 stores and 34 outlets in the U.S., Puerto Rico and Canada. Bebe’s stock is down 24.5 percent year to date, trading at the low end of a 52-week range of $3.02 to $9.10. – NEWSDAY

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J.C. Penney Co. (JCP) plans to hire 800 consultants in connection with an expansion in its beauty services segment, which will include 70 new Sephora Inside stores inside its department stores. Starting May 5, J.C. Penney is also expanding the size of 32 Sephora locations by about 50 percent and is now offering same-day pickup for online orders. “Creating a best-in-class beauty experience in stores is one of our biggest advantages over competition,” CEO Marvin Ellison said. J.C. Penney shares are down about 37 percent year to date. – MARKETWATCH

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