Blog/News

Toys R Us in Danger of Default

Sadie Keljikian, Express Trade Capital

It’s been a wild ride for Toys R Us and yet again, it looks like there may be a tragic end in sight.

Toys R Us filed for Chapter 11 in September in hopes of restructuring its debt and rebuilding. However, developments since then have been less than promising. Following a disappointing holiday season, Toys R Us announced that it would close 175 of its US locations, 20% of its total retail presence in the US.

Despite efforts to trim the fat and manage the retailer’s mounting debt, rumors are circulating that Toys R Us may breach a covenant in debtor-in-possession financing facilitated by J.P. Morgan Chase prior to the Chapter 11 filing due to insufficient funds. If Toys R Us is unable to pay off the $3.1 billion in financing, the lenders involved may choose to force the retailer into liquidation.

Although Toys R Us officials have dismissed these concerns as speculation, it seems highly unlikely that the toy retailer’s troubles are over.


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Bon-Ton Files for Chapter 11

Sadie Keljikian, Express Trade Capital

Retail chain Bon-Ton has filed for Chapter 11 bankruptcy relief.

The apparel retailer has been struggling with sales losses, mounting debt and management upheaval for some time. Late last year, the business invoked a 30-day grace period to pay $14 million in interest in hopes that holiday sales would supplement dwindling funds. Unfortunately, Bon-Ton reported a 2.9% fall in comparable-store sales during the crucial winter holiday period. When news of Bon-Ton’s increasing debt reached vendors, many of them began requiring letters of credit or cash on delivery for goods, which compounded the chain’s financial issues. In mid-January, conditions were so dire that stock fell to a meager $0.29.

As part of the restructuring plan, Bon-Ton executives decided to downsize the chain’s brick and mortar presence (particularly those in malls) in favor of expanding its ecommerce options. Like many store-based retailers, Bon-Ton is hoping to rise to competition from the likes of Amazon and other ecommerce-based retailers. According to the Securities and Exchange Commission filing, Bon-Ton plans to scrutinize 100 of its 260 US locations and close at least 40 and as many as 60 of them in 2019. Closures will likely include locations of all the chain’s stores including Carson’s, Elder-Beerman, Herberger’s and Younkers. The chain also plans to improve its more successful facilities by remodeling flagship stores and potentially opening new stores in more advantageous locations.

Taking a cue from Macy’s, Bon-Ton also plans to expand its private label products so that they make up 25% of total merchandise. For perspective, discount retailers Kohl’s and J.C. Penney (both of which have done remarkably well despite the difficulty facing brick and mortar retailers) occupy 46% and 52% of their products respectively with their own private labels. The chain also plans to renegotiate its leases and potential rent reductions to rein in operational costs. Unfortunately, Bon-Ton stocks have only continued to plummet, falling and lingering below $0.10 this week.

CEO Bill Tracy released a statement addressing plans for the chain’s uncertain future. He stressed that the company would continue operations as usual during the restructuring and that the company is currently discussing options with its debtholders and potential investors. Whether or not it will be enough to combat the significant financial and managerial difficulties facing the business, only time will tell.

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ETC Featured in TSL!

Sadie Keljikian, Express Trade Capital

Express Trade Capital is proud to be featured twice in The Secured Lender‘s first ever “Innovators” issue!

The new issue details ETC’s own VP Ashley Orlando and Managing Director Mark Bienstock, both of whom give details on Express Trade’s eco-financing efforts.

Click to see our announcement and read the full articles about innovations in the finance industry and the growing relationship between earth-conscious wholesalers and alternative lenders!

Learn more about our trade finance solutions here.

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Toys R Us Will Close 175 Stores

Sadie Keljikian, Express Trade Capital

Toys R Us continues to struggle, despite its attempts to restructure and rebuild since filing for Chapter 11 in September.

The once-dominant retailer is planning on closing 175 of its locations in the US, nearly 20% of its 881 operational locations as of October.

Soon after Toys R Us filed for Chapter 11, toy manufacturers restricted or cut holiday shipments and reined in payment terms, compounding the retailer’s financial problems and complicating attempts to recover over the crucial holiday season.

In December, the retailer held a conference call and reported that prior to the bankruptcy, sales had already decreased by 7%. Later in the month, Bloomberg reported that sales had since dropped by 15% year-over-year.

As of now, the toy chain’s future looks bleak, but only time will tell.


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Happy Chinese New Year from ETC!

 

As the Chinese New Year fast approaches, businesses are pre-emptively preparing for the expected shorter payment terms of their Asian suppliers.   In many instances, suppliers need funding for materials and production before the goods are shipped.  In such cases, open credit terms are not feasible, and this presents a prime opportunity to use our purchase order financing programs.

Simply put, our programs allow wholesalers to meet customer demand and fulfill their purchase orders.  By providing financing tailored to accommodate their own and their supplier’s needs, our programs enable clients to reduce risk while increasing cash flow all throughout their supply chain.  So if working capital or cash flow make it difficult to keep up with new orders and production, ETC can help.

ETC’s purchase order funding programs provide tools that empower clients to do more, risk less, and reach new heights.   Our platforms offer clients numerous advantages:

  • Letters of credit and documentary collection payments to cover the entire cost of goods and shipping
  • 100% cash funding for inventory in-transit, freight, duty and other related costs of transporting goods
  • Reduced risk, enhanced knowledge, and greater efficiency throughout the supply chain
  • A one-stop shop for financing and logistics solutions that allows for seamless integration with existing lenders
  • And more . . .

Contact us to learn more!


Winter Holiday Hours Announcement

Valued clients and associates:

Please be advised that in observance of Christmas and New Year’s Day, we will close early this Friday, December 22nd and next Friday, December 29th at 3pm and we will not open on Monday the 25th and Monday the 1st. Aside from those days/times, we will be fully operational.

Please plan your transactions accordingly and have a very happy holiday!


Toys R Us Continues to Struggle

Sadie Keljikian, Express Trade Capital

Toys ‘R’ Us may close at least 100 and as many as 200 locations in the wake of a 15% decrease from last year’s holiday sales to those recorded this year.

The former industry leader has had a difficult few years. After struggling under mounting debt, Toys R Us filed for Chapter 11 in September, claiming the retailer intended to restructure its debts and rebuild, but thus far, its troubles have only multiplied.

Mattel’s recent decline in the stock market has compounded the problem. Stocks of the Barbie and Fisher-Price manufacturer have seen a significant price decline in the last month and estimates negative earnings revisions for the current quarter as well as 2017 collectively. Toys R Us also suffered a technological error recently when a collection of promotional codes glitched, allowing customers to stack three separate codes and get a 60% discount on their order total.

Despite indications that Toys R Us may not last long, the business insists that all proceedings are in service of restructuring and rebuilding. Its bankruptcy status will simplify the process of closing the worst-performing Toys R Us locations. Only time will tell if the retailer will recover.

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Indian Onion Prices Peak

Sadie Keljikian, Express Trade Capital

Bangladeshi importers and consumers have recently suffered extreme price hikes in one of its most voluminous imports: onions from India.

Regional demand for onions is remarkable in general, since they are a dietary staple in several southeast Asian countries. This year’s underwhelming harvest, caused by excessive rainfall in the summer months, has driven Indian onion prices seven times higher than they were just five months ago. These prices are unprecedented and have caused significant disruption in the regional market. The effect has also spread, since several countries in the region rely on Indian onion exports to supplement their own domestic supplies and meet demand. Importers in Bangladesh, Malaysia, United Arab Emirates and other surrounding countries are scrambling to meet demand while Indian officials are limiting exports in an attempt to take care of domestic demand first.

Although the shortage and price hike are complicating things for many consumers across southeast Asia, some importers are taking advantage of the remarkably high profit margin they stand to earn until the next crop of onions hits the market and lowers prices again. Even some importers who normally don’t deal in food are taking the opportunity to make some extra money by shipping and distributing the precious onions.

We at ETC have entered the equation, issuing documentary letters of credit for onion orders from India. We also ship the produce on behalf of importers, primarily in Bangladesh, and assist them in securing both the onions themselves and a piece of the massive potential profit from this unique situation. ETC is uniquely situated, given the breadth and flexibility of our financing and logistical options, to enter such a frantic and volatile market and help our clients make the most of a difficult situation.

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Creative Sales Techniques

Sadie Keljikian, Express Trade Capital

Selling a product or service is complex and delicate. It often takes sales professionals years to master the subtle balancing act of emphasizing the value of their product or service without overselling. To this end, businesses should consider creative, less obvious approaches to intrigue prospects and attract a wider variety of clients.

If you struggle to modernize and optimize your sales process, here are a few creative tactics you may not have tried:

Build Relationships in Your Industry

Although it may feel like sleeping with the enemy, so to speak, there are numerous benefits to building a community within your industry. The most direct benefit is the ability to exchange referrals. Since most businesses across an industry offer slightly different products or services, prospects often run into suppliers that offer a product/service that is in the same ballpark, but not quite what they’re looking for.

If the supplier in question has good relationships within their industry, they can refer the prospect to one of their friends in the industry, who might be better equipped to meet the prospect’s needs.

Eventually, every business can develop a network of associates that generate a consistent flow of referrals in all directions, giving all parties optimal exposure to interested leads (and potential referral fees). Familiarizing yourself with competitors who provide services related to, but different from your own also allows you to get a broader scope of industry insights and expand the services you can offer clients and prospects.

Attend Your Customers’ Events

This may sound like a dubious networking move, but your customers’ events and gatherings give you the opportunity to take advantage of their network while supporting your existing clientele. As mentioned above, it is highly advantageous to build relationships with other businesses in your industry.  In the same spirit, your customers probably also have a rich network of similar businesses, so why not take advantage of the exposure and the positive experience your existing customers have had with you?

Create Urgency Wherever Appropriate

Unfortunately, many of us unintentionally drag out transactional proceedings, particularly when there’s no built-in urgency. If you find that you have a lot of genuinely interested prospects who lose track partway through negotiations, create a degree of urgency. Obviously, you shouldn’t put unnecessary pressure on your prospects, but when closing a deal, it’s useful to give prospects a reason to respond quickly. For example, if you’re a wholesaler with a range of handbags, you may want to tell your prospect that you can offer them samples of your latest designs at a discounted rate if they confirm the order within a limited time.

This prompts your prospect to weigh their interest and, if they are genuinely excited about your products, they will probably take advantage of the special offer. This method offers you the opportunity to gauge a (relatively inactive) prospect’s interest and see if further pursuit is worth your time. It also gives you another tool to help move the transaction forward now. Often, the longer a transaction takes to close, the more likely it is that a prospect will lose interest or find reasons to delay.

Offer Added Value Through Additional Support

Depending on your industry, sometimes your customers will want you to sweeten the deal a bit. If you have experience or knowledge that could be useful to your customers, you might want to offer complimentary counseling once the company is signed on with you as a customer. This feeds into a more general practice: always show interest in your customers’ continued success, since their success usually means your success. Showing clients that you are willing to help them beyond simply providing the core services you already offer builds loyalty and customer confidence, making it easier to close the sale and start your professional relationship on the right foot. Overdelivering on services is also likely to turn clients and potential clients into good references and referral sources.

Give Them an Out

Although self-deprecation isn’t usually a good sales technique, sometimes taking the pressure off is the best way to win a customer or, at least, to develop a good business contact. If you’ve been pursuing a prospect for a while and still aren’t sure how genuine their interest is, make a point of giving them an out on your next email. Something like “I understand if this is not the right fit…” is a friendly way of saying that you don’t plan to put excessive pressure on them and will back off if they aren’t interested. Not only will this give them peace of mind, it’ll improve their impression of you, especially if they are, in fact, interested.

Conclusion

Making a sale is always going to be a challenge, but employing a few unusual methods can surprise your prospects and keep your sales team sharp. The more sales-related tools you have at your disposal, the more sales you are likely to make. The key is to stay hungry, keep an open mind, and never stop exploring new ways to improve.


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ETC Featured in Retail Merchandiser

Sadie Keljikian, Express Trade Capital

Express Trade Capital is proudly featured in the current issue of Retail Merchandiser!

Managing Director Mark Bienstock, Director of Opportunity Drew Cohen and Senior Vice President David Estrakh spoke with Retail Merchandiser’s Bianca Herron about what makes ETC’s approach unique, how we’ve grown into the institution we are today, and our latest projects, most notably Stern Corporate Services Group.

Click to read the full article.

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