STORES AND EMPLOYEES
Belk said it would have no store closures or layoffs as a part of the bankruptcy. But analysts say it’s unlikely all of its 291 stores are profitable, or will be profitable when the pandemic subsides.
Bankruptcy makes it far easier to get out of leases, so why won’t Belk?
“If you were doing a proper restructuring, you would absolutely be looking at laying off staff, getting out of leases and looking at the store base,” said Saunders, the consultant.
“The fact that that’s not happening suggests that there’s no real future,” Saunders said. “This isn’t about retail anymore, this is about financial transactions and getting the most return out of the assets of business.”
And while the bankruptcy process itself will likely not have any closures or layoffs, notes in the disclosure form Belk sent to lenders suggest that cuts are likely coming.
In a general comment on business operations, the disclosure said that “Belk will consider replacing stores in markets where more attractive locations become available or closing stores where Belk does not believe there is potential for long-term success.”
And later on in the disclosure, in a footnote to a table of financial projections, cost cuts appear to be coming. Costs, as a percent of revenue, are projected to decline over the next four years due to “strategic right-sizing of components of the fixed cost structure,” among other reasons, the footnote read.
“Right-sizing” is corporate jargon for cuts, and “fixed cost structure” refers to regular payments, like salaries, leases, insurance or taxes. A Sycamore spokesperson declined to comment when asked what specific costs would be “right-sized”.
“A company like Belk may be able to come out of this bankruptcy cleaner in terms of debt load but that doesn’t mean the underlying business model is healthier than before,” Seesel, the retail consultant, said