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Tuesday, March 10, 2009

15 Companies that might not make it in 2009

As the economy slides further and further down the slippery slope of recession, odds makers are starting to look forward to the potential loss and closing of more companies. Here’s a compiled list of 15 companies that might not make it to 2010.
  1. Rite Aid
  2. Claire's Stores
  3. Chrysler
  4. Dollar Thrifty Automotive Group
  5. Realogy Corp.
  6. Station Casinos
  7. Loehmann's Capital Corp
  8. Sbarro
  9. Six Flags
  10. Blockbuster
  11. Krispy Kreme
  12. Landry's Restaurants
  13. Sirius Satellite Radio
  14. Trump Entertainment Resorts Holdings
  15. BearingPoint

Looking at this potential list, I only recognize half of the companies, a product of my sheltered Southwestern Pennsylvania life. I can only speak to those I am aware of, so this is not a complete analysis by any means.

Rite Aid
Perhaps the first major retailer to fall in the wake of Wall Street’s woes not solely at the fault of Wall Street. You can probably bet on seeing more stores like this collapse under the weight of Wal-Mart’s integration into everything America, especially during a recession. If Rite-Aid does go, keep an eye on CVS. They have roughly three times the revenue as Rite-Aid but again, competing with Wal-Mart is like going into a gun fight with a spork.

Claire’s Stores
One of the last bastion of 80’s fashion accessories, I’m surprised the chain is still around. Blame a hefty acquisition by its parent, Apollo Group, last year for signs of doom and gloom. These are the same folks that bought Linens-N-Things right before they went bye byes. Another factor, mall traffic is waning as people tighten their belts further.

Not even Michael Scott’s love of the Italian eatery could be enough to save them. Their financial standings aren’t that bad. Again, mall turnout is a definite factor in the loss column as is their competition from juggernaut’s Dominoes and Pizza Hut.

If The Detroit 3 were comparable to the Laff-A-Lympics, Chrysler would be The Yogi Yahooeys. They’re not as evil as The Really Rottens (GM), but not as strong as The Scooby Doobies (Ford), which boasted powerhouses Captain Caveman and Blue Falcon. You just can’t compete with one team that is pure evil and the other which has better players like the Taurus and F-150.

The media rental giant has been fighting an uphill battle ever since OnDemand became part of the digital basic service. Not to mention, they didn’t make any friends with their problems concerning late fees a few years ago. While they’ve tried to compete with NetFlix in the online mail order service, their brick-and-mortar approach is their strong suit and unfortunately bad economy equals less trips to the store and more home rental service through cable and satellite providers. While die hard cine-philes while still go to the store to rent DVDs for the extras, the general public has only the attention span for the movie by itself and needs only one night to watch defeating the no late fee perk Blockbuster has adopted. Similarly, my own local Supermarket staple Giant Eagle did away with its DVD and game rental service in house and opted for the vending machine style Red Box kiosks outside the store. They’ve already surpassed Blockbuster’s number of locations and require no Kevin Smith and Quentin Tarrantino types on the minimum wage payroll.

Sirius Satellite
Desperate times call for desperate measures. In this economy people are going to start looking at the things they can do without and a subscription to satellite radio is not safe even with Howard Stern as its biggest feature. As XM and Sirius decided to join forces instead of die alone in the satellite market, HD radio has tried to carve out its niche by touting more music for free. Frankly, I can’t find enough good music to listen to on regular radio, why would I pay for satellite or even an HD receiver both of which could cost hundreds of dollars. I’ll stick to my iPod and NPR for my tunes and news. Most people will either resort to buying CDs or songs from places like iTunes and becoming their own DJ, commercial free.

Krispy Kreme
Talk about having two strikes against you. The donut giant exploded onto the scene in the 90’s and its impact was much like a sugar rush. Fun and exciting at first, but the withdrawal and crash later was detrimental. First off, the healthier conscious America began shunning the franchise, which started closing locations, some months after they were opened. Now, with the recession, donuts are less of a necessity and more of a luxury. Unless the stimulus package can gave an insulin boost to the economy, the Hot Light may go out for good.

Six Flags
This one surprised me. Granted, they bought up the defunct Sea World park in Ohio, before turning around and selling it to Cedar Point’s parent group Cedar Fair, but being paired with a Hollywood Giant Warner Bros. should count for something, right? Six Flags has been in trouble for years with investor issues and having to sell off assets to pay off debt. Unfortunately, the economy has taken the plunge over the lift hill and it’s a hell of a drop before it goes into the next hill. Bad economy = no money = no vacations = no riders = no fun.

Trump Entertainment Resort Holdings
The fact that the namesake left in February should give you an indication of how bad things are. They also filed for Chapter 11 and casino buying is the third rail in a bad economy. No one will touch them. People aren’t going to gamble what little money they have, especially if they have to travel outside a certain radius and possibly pay for lodging as well.

You have to take these prognostications with a grain of salt. It shouldn’t take a psychic to see what sectors of the economy are going to suffer the worst in a recession. Entertainment, luxury items, and businesses that have direct competition with other businesses that can undercut their prices are going to suffer. A powerhouse like Wal-Mart can pretty much outmatch any niche store because of all of its offerings.

The bleakest looking outcome for this mess would be that only two things will be left standing, the U.S. Government and Wal-Mart. In that scenario, Wal-Mart will buy the U.S. Government, offering to handle all of its services at a discounted rate, and we will finally be under the rule of the Chinese. In this case, learning “Would you like fries with that?” is not going to help you.

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