Gymboree begins winding down operations after 2nd bankruptcy
Thursday, January 17
SAN FRANCISCO (AP) — Gymboree has filed for bankruptcy protection for a second time in as many years, but this time the children’s clothing retailer will begin winding down operations for good.
The San Francisco company said late Wednesday that it will close all of its Gymboree and Crazy 8 stores and attempt sell its Janie and Jack business, intellectual property and online business.
“The company has worked diligently in recent months to explore options for Gymboree Group and its brands, and we are saddened and highly disappointed that we must move ahead with a wind-down of the Gymboree and Crazy 8 businesses,” CEO Shaz Kahng said in a prepared statement.
Gymboree, which began offering classes for mothers and their children in 1976, runs 380 Gymboree stores in the U.S. and Canada. When it first sought Chapter 11 bankruptcy protection in June 2017, it ran 1,300 stores.
The company has suffered in the post-recession years like almost all mall-based retail stores. Steep declines in mall traffic and the shift online have devastated many traditional retailers. This week, 132-year-old department-store chain Sears averted liquidation when billionaire Eddie Lampert won tentative approval for a $5 billion plan to keep it in business.
The holidays, the most important time of the year in retail, was not nearly as robust as most had expected it to be. Macy’s suffered its worst-ever day of trading after putting up lackluster holiday numbers, and Kohl’s reported a dramatic slowdown from a year ago. Macy’s is considered a barometer of spending in malls.
Before the opening bell Thursday, retailers were among the worst performers on the S&P 500.
Gymboree was bought by the private equity firm Bain Capital for $1.8 billion in 2010 and taken private.
Want better tips? Go for gold
January 17, 2019
Researchers studied whether subtly being exposed to different colors could change tipping behavior.
Author: Na Young Lee, Assistant Professor of Marketing, University of Dayton
Disclosure statement: Na Young Lee received financial support for her research in this article from Marketing and Supply Chain Management Department at the University of Tennessee – Knoxville.
Partners: University Of Dayton provides funding as a member of The Conversation US.
Although tipping is generally thought to be a voluntary payment meant to express gratitude to a service worker, the history of tipping suggests that it originated as a way for people to flaunt their wealth.
But what if diners could be made to feel wealthy? Would they leave bigger tips? And could simple exposure to a color do the trick?
My colleagues and I recently completed a study that explored how the color gold could affect tipping.
Coloring consumer behavior
Many studies have documented how colors influence consumer behavior.
For example, customers who shop in a store that’s decorated with blue, cool colors are more likely to linger longer, buy something and spend more than shoppers who frequent a store with red, warm-colored decor. Some researchers theorize that this happens because cooler colors make shoppers feel more relaxed and pleasant. Warmer colors, on the other hand, are more stimulating and arousing.
In a clothing store, these stimulating colors might hurt store sales because they could make customers feel rushed. But in a fast food restaurant – a business that wants customers in and out – stimulating colors like red, yellow and orange might hasten table turnover and increase customer traffic. There’s probably a reason McDonald’s, Wendy’s, Burger King, In-N-Out Burger, Sonic and Carl’s Jr. all use similar red and yellow color schemes.
A handful of studies have also looked at whether colors could influence the size of waitstaff tips. They found that the size of tips can be influenced by the color of the waitstaff’s hair, clothing and even lipstick (go for red, not pink).
A golden rule for waitstaff?
Studies have shown that tipping is more prevalent in countries where achievement or status is highly valued. And despite conventional wisdom that the amount of the tip is determined by the quality of service, several studies have shown that there’s a weak relationship between the tip amount and the servers’ efforts. Instead, a couple of studies have found that the tipper’s socioeconomic status or mood has a meaningful relationship to tip size.
In our study, we gave diners their bill in either a gold folder or a black folder. When we compared the tip amounts, we found that customers who received their bills in the gold folder left, on average, 21.5 percent tips, whereas those who received the black folder left 18.9 percent tips.
Most bill folders are black. What if people simply tipped more because a gold folder was something novel? So we tested the impact of an orange-colored bill folder, only to find that this didn’t lead to bigger tips.
The effect of gold goes beyond the bill folder. We created a mock restaurant and found that customers who were seated at tables with gold tablecloths left larger tips than those who were seated at tables with white tablecloths.
Why might this be the case? The color gold has long signified something special, precious and superior. It can subtly connote status, which is why companies will use gold when marketing their rewards programs – think Starbucks’ and American Express’ Gold Card.
It seems that mere exposure to the color makes customers feel like they’re in a restaurant that caters to high-status people. And when people feel like they’re wealthier, they tend to be more inclined to flaunt their wealth.
Of course, no amount of gold decor can make up for a messed-up order.
Sears survives a near-death experience, but for how long?
By ANNE D’INNOCENZIO
AP Retail Writer
Thursday, January 17
NEW YORK (AP) — Sears will live on — at least for now.
Its chairman and biggest shareholder, Eddie Lampert, won tentative approval for a $5 billion plan to keep the ailing, 132-year-old department-store chain in business, fending off demands from creditors that it throw in the towel, according to a person familiar with the negotiations. The person was not authorized to discuss the matter and spoke on condition of anonymity Wednesday.
Lampert, the hedge fund owner who steered Sears into Chapter 11 bankruptcy protection in October, is aiming to keep open roughly 400 stores and preserve tens of thousands of jobs.
But how long Sears can survive under the 56-year-old billionaire, who has tried and failed to turn it around many times before, remains an open question.
The company that was once the Amazon of its day, selling everything from girdles to snow tires, still faces cutthroat competition from the likes of Amazon, Target and Walmart. Its stores are looking drab and old. And Lampert has yet to spell out how he plans to change the company’s fortunes.
“While there’s no doubt that a shrunken Sears will be more viable than the larger entity, which struggled to turn a profit, we remain extremely pessimistic about the chain’s future,” said Neil Saunders, managing director of GlobalData Retail.
“In our view, Sears exits this process with almost as many problems as it had when it entered bankruptcy protection. In essence, its hand has not changed, and the cards it holds are not winning ones.”
Sears’ corporate parent, which also owns Kmart, had 687 stores and 68,000 employees at the time of its bankruptcy filing. At its peak in 2012, its stores numbered 4,000.
The company was hammered during the recession and outmatched in its aftermath by shifting consumer trends and strong rivals. It hasn’t had a profitable year since 2010 and has suffered 11 straight years of declining sales.
At a bankruptcy auction held this week in New York, Lampert won the OK from a subcommittee of the Sears board for a rescue plan financed through an affiliate of his hedge fund ESL.
Many of Sears’ unsecured creditors, who rank at the bottom of the list to be paid and include merchandise suppliers and landlords, had pressed for liquidation, contending the business was worth more dead than alive. They also questioned the propriety of certain deals Lampert has done while at Sears.
Lampert’s rescue plan still needs approval from a bankruptcy judge in White Plains, New York. A hearing is set for Feb. 1. Creditors will have the opportunity to object before then. The specific terms of the bid haven’t been made public.
Lampert personally owns 31 percent of the Sears’ outstanding stock, and his hedge fund has an 18.5 percent stake, according to FactSet.
Lampert, who stepped down as CEO in October after being in that role since 2013, pledged years ago to return Sears to greatness, but that never happened. He has been criticized for not investing in the stores.
Under Lampert, Sears has survived in part by spinning off stores and selling well-known brands like Craftsman tools, and he has also lent some of his own money, though critics say his real aim was benefiting his hedge fund.
If his bid to save Sears gets final approval, he will need to reinvent the business. That means revitalizing the stores and focusing on the major appliances and tools that were once Sears’ proudest products, industry analysts say.
Sears will also need to convince shoppers like Sanjay Singh they should come back.
Singh was recently shopping with his wife at the Newport Centre Mall in Jersey City, New Jersey, and stopped by a Sears to look for a swimsuit for his 11-year-old daughter. He said he usually shops at places like Macy’s and J.C. Penney because they have a better assortment of merchandise and the quality is also better.
“Sears is usually my last option,” he said.
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The biggest nonprofit media outlets are thriving but smaller ones may not survive
January 17, 2019
Author: Bill Birnbauer, Adjunct Senior Lecturer, School of Media, Film and Journalism, Monash University
Disclosure statement: Bill Birnbauer is affiliated with the International Consortium of Investigative Journalists
Partners: Monash University provides funding as a founding partner of The Conversation AU. Victoria State Government provides funding as a strategic partner of The Conversation AU.
Richard Tofel, ProPublica’s president and founding general manager, likes to say the U.S. nonprofit news site was “born on third base.” Indeed, when the Pulitzer-winning outlet launched in 2008, ProPublica had US $10 million in its coffers from Herb and Marion Sandler. The wealthy mortgage bankers gave it a flying start in a sector that remains heavily reliant on foundation grants.
As I explain in my book on U.S. nonprofit investigative journalism, wealthy individual donors over the past decade have provided the venture-like capital to create the most successful nonprofit news organizations, which foundations have subsequently backed with grants.
The Texas Tribune, a nonprofit site focused on that state and launched with money from venture capitalist John Thornton and the Marshall Project, a news site that focuses on criminal justice issues and was initially capitalized by Neil Barsky, also illustrate this pattern.
But while the overall funding for nonprofit news sites presents a “robust picture” according to a recent Institute for Nonprofit News survey of 88 of the network’s media members, large donations by rich philanthropists and foundations generally have benefited only a handful of new startups and nationally focused nonprofit media.
While researching the financial health of U.S. nonprofit news media, I’ve found a huge disparity between the most successful nonprofit news organizations and the smaller outfits, with some operating on the “sweat equity, heart and hope” of journalists who struggle to raise funds.
This situation should concern those who are looking to nonprofit news organizations to provide serious journalism in areas that have been diminished, neglected or abandoned by newspapers, such as statehouse coverage, specialist reporting on topics such as the environment and health, and reporting for minority communities.
McNelly Torres, a co-founder of the small Florida Center for Investigative Reporting, told me she rated her chances of receiving a big grant from a national foundation as “one to a million. The big guys are always on top … so the little guys always struggle.”
I analyzed the IRS returns of 60 Institute for Nonprofit News members, about half of the institute’s membership at the time. Foundations and donors gave those outlets a total of $469.5 million between 2009 and 2015.
Three national news organizations – ProPublica, the Center for Public Integrity and the Center for Investigative Reporting – took in $185.4 million, or 40 percent of that money.
The 20 largest of these media operations amassed the vast majority of the funds: $423.1 million. In addition to the top three sites, other well-funded outlets included the Foundation for National Progress that publishes Mother Jones magazine in print and online, Texas Tribune, the Voice of San Diego and the Investigative Reporting Workshop, based in the School of Communication at American University.
In contrast, the least-funded 20 organizations, such as Georgia Health News and the Florida Center for Investigative Reporting, eked by on just $8.6 million over these five years – less than 2 percent of all money raised. The middle 20 sites, such as the consumer safety-focused FairWarning and Oklahoma Watch didn’t fare much better. They got by on a total of $37.7 million.
I found that dozens of state and city-focused news organizations have annual budgets of $200,000 or less, and a survey of Institute for Nonprofit News members found 9 percent had no more than $100,000 in yearly revenue.
I believe some news sites may have to merge with local public radio and television broadcasters or other journalistic nonprofits in order to improve their viability. Like several that already have closed their doors, such as Colorado Health News and the Chicago News Cooperative, some may ultimately fold due to financial problems – no matter how well their work serves the public interest.
Existential fears and new revenue sources
The nonprofit media leaders at smaller news organizations that I interviewed expressed existential fears about their funding. FairWarning founder Myron Levin told me that he doubted some of his backers would renew their grants. “I don’t know if some of those people are going to stick with us,” he said. “Just don’t know. It’s fickle, absolutely.”
Lila LaHood, the publisher of the San Francisco Public Press, said there was no guarantee of continued support from foundations. “Even when foundations like you, sometimes after a couple of years they say, ‘there’s going to be a break in funding,’” she said.
Because of the uncertainty of foundation funding, many nonprofit news sites are attempting to ramp up their incomes through membership programs and boost the donations they get from individual donors. That strategy makes them less dependent on foundations and other big philanthropies and mirrors a rise in subscriptions for newspapers like The New York Times, The Washington Post and other big mainstream media outlets.
But, with some exceptions, the news organizations that get the biggest grants from foundations are the same ones seeing an uptick in subscription and membership revenue because they do the most high-profile journalism and can afford to employ professional fundraisers or development staff.
I believe that this branching out is exacerbating the gaps between the nonprofit media haves and have-nots.
For example, Pasadena-based FairWarning had about 200 individual donors, Levin told me. In contrast, ProPublica, which listed total revenues of $43 million in 2017, had 34,000 donors who contributed almost $7 million, Tofel said.
While the number of nonprofit news organizations has increased over the past decade and the sector’s funding has grown overall, many city and state-based news organizations that are filling gaps in local reporting have not yet persuaded enough foundations without a tradition of funding media, wealthy philanthropists and smaller donors to back them.
Unless that happens, in my view, nonprofit journalism will not reach its potential, no matter how valuable its coverage, nor will it abate the spread of “news deserts” across the United States.
The Conversation US, which recently became an Institute for Nonprofit News member, relies on funding from foundations and universities as well as donations from individuals. The author of this article did not review its funding data as part of his study.
The best Rx for teens addicted to vaping? No one knows
By MATTHEW PERRONE
AP Health Writer
Wednesday, January 16
WASHINGTON (AP) — The nation’s top health authorities agree: Teen vaping is an epidemic that now affects some 3.6 million underage users of Juul and other e-cigarettes. But no one seems to know the best way to help teenagers who may be addicted to nicotine.
E-cigarettes are now the top high-risk substance used by teenagers, according to the latest U.S. figures , which show that Juul and similar products have quickly outpaced cigarettes, alcohol, marijuana and other substances that have been tracked over more than four decades.
The handheld devices heat a liquid solution that usually contains nicotine into an inhalable vapor. Federal law prohibits sales to those under 18, though many high schoolers report getting them from older students or online.
In recent months, government officials have rolled out a series of proposals aimed at keeping the products away from youngsters, including tightening sales in convenience stores and online. In November, vaping giant Juul voluntarily shut down its Facebook and Instagram accounts and pulled several flavors out of retail stores.
But there’s been little discussion of how to treat nicotine addiction in children as young as 11 years old. While some adolescents should be able to quit unaided, experts say many will be hampered by withdrawal symptoms, including anxiety, irritability, difficulty concentrating and loss of appetite.
Physicians who treat young people now face a series of dilemmas: The anti-smoking therapies on the market — such as nicotine patches and gums — are not approved for children, due to lack of testing or ineffective results. And young people view the habit as far less risky, which poses another hurdle to quitting.
The harshness of cigarette smoke often limits how much teenagers inhale, sometimes discouraging them from picking up the habit altogether. That deterrent doesn’t exist with e-cigarette vapor, which is typically much smoother, according to experts.
Kicking any addiction requires discipline, patience and a willingness to follow a treatment plan — something that doesn’t come easily to many young people, experts said.
“Teenagers have their own ideas of what might work for them, and they’re going to do what they do,” said Susanne Tanski, a tobacco prevention expert with the American Academy of Pediatrics. “But we desperately need studies to figure out what’s going to work with this population.”
Since debuting in the U.S. in 2007, e-cigarettes and other vaping devices have grown into a $6.6 billion business. Driving the recent surge in underage use are small, easy-to-conceal devices like Juul, which vaporizes a high-nicotine solution sold in flavors such as creme, mango and cucumber. Despite industry worries of a crackdown on flavors, the FDA has taken no steps to ban the array of candy and fruit varieties that companies use to differentiate their offerings.
E-cigarettes have become a scourge in U.S. schools, with students often vaping in the bathroom or between classes. One in 5 five high schoolers reported vaping in the last month, according to 2018 federal survey figures.
Juul and other brands are pitched to adult smokers as a way to quit smoking, but there’s been little research on that claim or their long-term health effects, particularly in young people. Nicotine can affect learning, memory and attention in the teenage brain, but there’s virtually no research on how e-cigarette vapor affects lungs, which do not fully mature until the 20s.
“It’s frightening for me as a pediatrician because I really feel like there’s this uncontrolled experiment happening with our young people,” Tanski said. “They don’t perceive the harm, and we can’t show them what it’s going to be.”
Tanski and other experts will meet this Friday at the Food and Drug Administration to discuss the potential role for pharmaceutical therapies and non-prescription medications such as nicotine gums and patches.
Regulators acknowledge they are starting from square one: The FDA “is not aware of any research examining either drug or behavioral interventions” to help e-cigarette users quit, the agency noted in its announcement.
The FDA will also hear from researchers, vaping executives, parents and teenagers.
“We want to make sure our voices are heard and that — most importantly — our kids’ voices are heard,” said Meredith Berkman, who plans to speak at the meeting with her 10th-grade son.
Berkman said she first realized her son and his friends were “Juuling” last year when she heard them repeatedly opening and closing his bedroom window. With two other New York City mothers, she formed the group Parents Against Vaping E-cigarettes, which is asking the FDA to ban all e-cigarette flavors.
“Unless the flavors are off the market, kids are going to continue to be seduced by these highly addictive nicotine-delivery systems like Juul,” Berkman said.
Quitting smoking is notoriously difficult, even for adults with access to various aids and programs. More than 55 percent of adult smokers try to quit each year, yet only about 7 percent succeed, according to government figures.
Nicotine gums, patches and lozenges are available over-the-counter for those 18 and older, and are occasionally prescribed “off-label” for younger patients. They provide low levels of nicotine to help control cravings. Prescription drugs include Zyban, an antidepressant, and Chantix, which blocks the effects of nicotine on the brain. But neither has shown positive results in teenagers, and both carry worrisome side effects, including suicidal thinking for Zyban and nausea and abnormal dreams for Chantix.
That leaves counseling as the go-to option for teenagers trying to quit cigarettes.
In November, Colorado dropped the minimum eligibility age for its quit-smoking hotline from 15 to 12, in response to the explosion in vaping among students as low as 6th grade. The state’s underage vaping rate is the highest in the U.S., with 1 in 4 high school students reportedly using the products, according to federal data. The state’s over-the-phone and online programs provide free coaching to help users create a quit plan, manage cravings and avoid relapse.
But even counseling has shown only “limited evidence” in helping teenagers, according to an exhaustive review of the medical literature published in 2017.
Still, addiction specialists see growing demand for such programs, particularly group sessions that often have the most promising results.
Addiction psychiatrist Jonathan Avery says he gets four to five calls a week from pediatricians referring patients or asking about treatment options. One of the biggest problems is an education gap — many doctors haven’t heard of Juul and don’t even recognize the vaping devices brought in by parents.
On the other side, teenagers are often “suspicious” when he informs them that they are inhaling a highly addictive substance, said Avery, of New York-Presbyterian Hospital.
About two-thirds of U.S. teenagers do not realize that Juul contains nicotine, according to a recent survey by the Truth Initiative, an anti-smoking advocacy group.
The U.S. Surgeon General, Jerome Adams, hammered that point home in a rare public advisory last month. He said even his 14-year-old son believed that e-cigarette vapor was essentially harmless.
“Youth like my son have no clue what’s in these products most of the time,” he said.
Follow Matthew Perrone at AP_FDAwriter
The Associated Press Health and Science Department receives support from the Howard Hughes Medical Institute’s Department of Science Education. The AP is solely responsible for all content.