Eddie Bauer And Other Retailers Are Considering Bankruptcy
In Lee County Florida, we have been feeling the economic pinch for a long time. People living in Fort Myers, Cape Coral and Lehigh Acres, Florida have witnessed a dramatic landscape change over the past two years. From a booming economy to a depression, many people are still shaking their heads wondering how their homes, which were once valued at $350,000, are now valued at $150,000, and still there are no buyers.
Now, we see that the large retailers, like Eddie Bauer (EBHI), are being pinched by the economic slowdown because people are tightening their belts. In a way it is good and in a way it is bad. First, people are beginning to save their money, and that is a good thing. No longer are they looking to their credit cards as open lines of credit. So, if there is an emergency, they can whip out the plastic and take care of the problem. People can now look to their savings to bail them out.
However, because more people are saving their money and spending less, this hurts national retailers like Eddie Bauer, Circuit City, Sharper Image, and Linen 'n' Things. They relied on discretionary spending. Now that discretionary spending has dried up.
Just image the impact on a national level. Let's say that the United States has 300 million people, and they each saved $1 per week. That would take 1. 2 Billion dollars out of the economy each and every month. Over a one year time frame that would be over $14 billion dollars each and every year. Now imagine that those same people saved $5 per week. That would equate to almost $70 billion dollars per year out of the economy. Imagine if the number were $10 per week. Wow, that would be $3 billion dollars per week being saved. $12 billion dollars per month, and over $144 billion dollars per year being saved.
It wouldn't take long to get most people back onto a firm footing, which would result in more banks with better balance sheets. Banks with better balance sheets would lend more money at lower interest rates. It's shocking, how simple this all becomes.
The numbers become staggering in a very short period of time. So, you look at a national retailer like Eddie Bauer and you begin to wonder just how a simple paradigm shift in people's thinking about discretionary spending can change the retailing landscape and virtually bankrupt a major corporation overnight.
This post was submitted by Carmen Dellutri, Esq., founder of The Dellutri Law Group, P.A. Currently, the firm has offices in Port Charlotte, Fort Myers, Naples and Sarasota. Mr. Dellutri also sits on the Board of American Board of Certification. Mr. Dellutri is also one of the founders of the Bankruptcy Law Network, Debt Law Network, Credit Law Network, and Mortgage Law Network. Mr. Dellutri also writes for the firm's personal injury litigation blog and the firm's mortgage modification blog.
