Retail Bankruptcies

In the last couple of months, we've seen retailers Levitz, Sharper Image, The Bombay Company, Lillian Vernon, Harvey Electronics, Wickes Furniture and Fortunoff's go belly up. The International Council of Shopping Centers (who knew there'd be such an organization?) projects 5,770 stores will close this year, the most since 2004. It's kind of hard to tell if this is a lot or a little, and clearly these bankrupt retailers aren't exactly in our market space. But what we do know is that consumers aren't in a position to take as much money out of the equity in their houses as they use to be able to get, spending is softening, and credit is getting tighter.

We think we're somewhat immune to these economic gyrations and maybe, to some extent, we are. Still, if I were running an action sports company right now, I'd be all over my receivables.

Collecting receivables in this industry, especially in snowboarding I'd say, has always been a bit of an adventure. I imagine the adventure is going to continue- at least. Remember, this is looking like it might be an actual recession, as opposed to our last two slowdown which our industry hardly noticed.

Take your receivables manager out to a nice lunch, spend some time perusing your receivables aging, and revisit your credit policies in light of economic conditions. Sales aren't much use if you can't collect.