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Gap to Shore Up Liquidity Amid Cash Squeeze Warning

Gap to Shore Up Liquidity Amid Cash Squeeze Warning

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Gap Inc. (GPS) raised $2.25 billion in debt as the cash-strapped clothing retailer warned that it may run out of money in the next 12 months, while also announcing the suspension of rent payments.

Gap will use the net proceeds of the debt offering to refinance its $1.25 billion notes due April 2021, as well as all outstanding amounts under its existing $500 million, five-year, unsecured revolving credit facility, which is scheduled to expire in May 2023, and for general corporate purposes.

In March, the ailing apparel retailer temporarily closed its North American retail stores and a significant number of our stores globally due to the coronavirus-related lockdown orders implemented by governments around the world.

“As we continue to manage through the impacts of the COVID-19 pandemic in fiscal 2020, it continues to negatively impact our operations and liquidity,” Gap said in a SEC filing. “We will need to take additional actions to both preserve existing liquidity and seek additional sources of liquidity, beyond our currently available cash and credit facilities within the next 12 months as existing cash and cash expected to be generated from operations may not be sufficient to fund our operations.”

In addition, Gap announced that it stopped all rent payment in April for its North America stores, which amounts to $115 million. The retailer is in negotiations with the parties under those leases to defer or abate the rent during the store closure period. Going forward once stores reopen, the company is seeking also to change the terms (including rent) of its leases, in certain instances to terminate the leases to permanently close some of the stores.

As part of the clothing retailer’s cost-cutting frenzy, it will cut planned capital expenditures by about $300 million in fiscal 2020, pull the full-year 2020 guidance issued on March 12, defer payment dates for our its previously announced first-quarter dividend, and suspend its regular quarterly cash dividend for the remainder of fiscal year 2020.

The company’s shares have slumped 60% since the beginning of the year closing 2.8% lower at $6.90 on Friday.

Wall Street analysts have a bearish outlook on Gap’s stock, rating the retailer with a Moderate Sell based on 10 Holds and 5 Sells. The $10.64 average price target implies 54% upside potential in the coming 12 months. (See Gap stock analysis on TipRanks).

As of February 1, Gap had cash, cash equivalents, and short-term investments of $1.7 billion. Going forward, the clothing retailer expects to have $750-$850 million of cash and cash equivalents inclusive of short-term investments in the fiscal quarter ending May 2.

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The post Gap to Shore Up Liquidity Amid Cash Squeeze Warning appeared first on TipRanks Financial Blog.

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Wokeism Is Costume Elites Wear To ‘Signal Virtue’ And ‘Hide Greed, Corruption’: Former Levi’s Executive

Wokeism Is Costume Elites Wear To ‘Signal Virtue’ And ‘Hide Greed, Corruption’: Former Levi’s Executive

Authored by Ella Kietlinska and Jan…

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Wokeism Is Costume Elites Wear To 'Signal Virtue' And 'Hide Greed, Corruption': Former Levi's Executive

Authored by Ella Kietlinska and Jan Jekielek via The Epoch Times (emphasis ours),

The pose of wokeness is a costume that the left liberal elite puts on to virtue signal that they care about social justice and to hide their greed and corruption, said the former executive of a major brand-name apparel manufacturer.

Jennifer Sey, former Levi Strauss and Co. chief marketing officer and brand president, as well as author of “Levi's Unbuttoned: The Woke Mob Took My Job but Gave Me My Voice," in Denver on Nov. 20, 2022. (Jack Wang/The Epoch Times)

Jennifer Sey, former chief marketing officer and brand president of Levi Strauss & Co., told EpochTV’s “American Thought Leaders” program that she had “pushed back” on the public school closures due to COVID-19 for two years, and in the end, she was pushed out of the company for her advocacy.

Sey, who was sending her children to public schools, believed that prolonged school lockdowns were harmful to children and started speaking out against them at the beginning of the pandemic.

Sey said she and her husband were reading the data that was coming out of Italy at the start of the pandemic, a country heavily hit by the disease, and the data showed that the median age of death due to the disease was over 80.

Nobody was bothering to look at actual data or adhere to the pre-pandemic playbook, which said you never shut schools down for more than a couple of weeks,” Sey pointed out. “It was from day one that me and my husband, we both said, ‘Hell no, this is wrong. People are going to be harmed.’”

An aerial view of the schoolyard at Frank McCoppin Elementary School in San Francisco on March 18, 2020. (Justin Sullivan/Getty Images)

In September 2020, Sey’s company warned her that her advocacy against school closures could be considered speaking on behalf of the company, “the implication being, there would be reputational harm to the company caused,” she said.

At the same time, her peers began sending their kids back to private in-person schools, Sey continued.

“I was so angry that these people would dare to say to me while sending their own kids to in-person school: ‘You can’t advocate for poor children to be in school.’”

Sey said it was atypical for her peers—and even for employees two or three levels below her in the corporate hierarchy—to send their kids to public school in her city of San Francisco.

I thought the lightbulb would go off, and people would see the hypocrisy if I just made it clear in a calm, nice way. But they didn’t, because the hypocrisy, in a sense, is the point.”

“This pose of wokeness, it’s a cloak they wrap themselves in to signal virtue … to hide greed, corruption, keeping all the good stuff for themselves,” she said.

It’s this costume that the left, liberal elite wraps around themselves to say, ‘I care about social justice. I care about all these causes. I am a good person.’ If you threaten to expose that, you need to be banished.”

Sacrificed Career for Speaking Out

Around the time of the new year in 2022, Sey was told that there was no longer a place for her at the company.

“You can’t be the CEO because of the things you’ve been saying and doing. Therefore, you can’t sit in your current chair because that is the role that ultimately becomes the CEO, so you need to leave,” Sey said she was told.

She was offered a $1 million severance package, which she decided to turn down because it would come with the signing of a nondisclosure agreement.

“What the nondisclosure agreement would require is that I never speak about the terms of my ousting. I was not OK with that,” she said.

In February, Sey resigned from her post at Levi Strauss & Co. after almost 23 years with the company.

The Epoch Times reached out to Levi Strauss & Co. for comment.

Sey said the illiberalism that has traveled from college campuses into companies and taken hold of corporations across the country is “incredibly dangerous.”

“If you insist on a culture where free speech is not tolerated, not only is it non-inclusive, which is problematic in and of itself, but I actually think it’s fraught and rife with the potential for corruption and fraud, like we’ve seen with Theranos and FTX and Enron,” she said,

Theranos, a company that claimed to provide blood testing lab services with a single drop of blood, defrauded its investors in a multimillion-dollar scheme. Its founder, Elizabeth Holmes, was recently sentenced to 11 years in prison.

FTX, a Bahamas-based cryptocurrency exchange, recently went bankrupt along with more than 130 affiliate companies due to insufficient liquidity. FTX users are potentially facing $8 billion in cumulative losses, while investors in the company are likely to lose their entire investment as a result of the bankruptcy.

Enron, a Texas-based energy-trading company, went bankrupt in 2001 due to fraudulent accounting practices and conflicts of interest. Within a year, Enron’s stock price plummeted from about $90 per share to 26 cents per share, which caused billion-dollar losses to investors, thousands of job losses, and the liquidation of more than $2 billion in pension plans.

There were people in those companies who knew what was going on, but they didn’t feel they could say anything,” Sey said.

“If you cannot have a conversation in the company about what is working and what is not working, what is true and what is not, you can’t innovate. You can’t move forward,” she said. “It stands in the way of progress when we can’t have these conversations because we’re all just adhering to propaganda.”

 “It is a violation of the spirit of the First Amendment,” Sey added.

Jennifer Sey (R) is seen at the Levi’s Times Square Store Opening in New York City on Nov. 15, 2018. (Dave Kotinsky/Getty Images for Levi’s)

Wokeism Is an Ideology

Being “woke” during the 1940s through the beginning of the 1960s meant “being awake or alert to the fact that there was racial inequality, and being part of the movement to change that,” Sey said. “It’s admirable, I have no issue with that.”

However, in the last 10 or 15 years, and especially in the last three to five years, those beliefs have been corrupted and commodified “into an ideology which can never be questioned,” such as gender ideology, race ideology, or body positivity, Sey explained.

Sey said that she was very supportive of transgender people working in her team. “I would never want a person to be discriminated against for anything, including being unvaccinated.”

But someone who questions whether an 11-year-old should be on puberty blockers, when there is no research on the mid- to long-term impacts of this therapy, is considered evil and must be banished for violating this ideology, Sey said.

“[Wokeism] has become religious in nature. Woke capitalism is really just an attempt to profit off of this ideology and the passion behind this ideology amongst primarily Gen Z and millennial consumers,” she said.

Another example of ideology that cannot be questioned is the idea of “body positivity,” which touts that the size of the body does not affect its health, Sey said.

We couldn’t say during COVID that it was dangerous to be overweight. I said it, and that made me a fat-phobe,” she said.

“We can’t say that, because the mantra is ‘healthy at any size.’ It’s ideological. And you have to be pure in the belief of that ideology, or you are evil and must be shunned.”

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Tyler Durden Sun, 12/04/2022 - 20:20

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Is the Establishment Series Overestimating NFP Employment?

That is the proposition forwarded by Kevin Drum at Jabberwocking. Verbatim: So: have we really created 2.5 million new jobs since March? I’m not sure…

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That is the proposition forwarded by Kevin Drum at Jabberwocking. Verbatim:

So: have we really created 2.5 million new jobs since March? I’m not sure I believe that.

The graph he posted summarizes his argument succinctly:

Source: Drum (2022).

The stylized fact is that the household series adds almost nothing to the information contained in the establishment series regarding the cyclical behavior or employment, a point made by practictioners (see Furman, 2016, or CEA, 2017). However, the possibility of mismeasurement, particularly in these times, remains. Some suggestion of mismeasurement is provided by the behavior of not-seasonally-adjusted nonfarm payroll (NFP) employment, and total employment covered by the Quarterly Census of Employment and Wages (QCEW). For a variety of reasons relating to employees coverage, the numbers vary, but the overall trends should provide some insight.

Figure 1: Log ratio of nsa NFP to QCEW (blue), and 2001-19 average (red dashed line). NBER defined peak-to-trough recession dates shaded gray. Source: BLS via FRED, BLS, NBER, and author’s calculations. 

In 2021 and the first half of 2022, NFP has been below what the historical relationship with QCEW would suggest.

While the establishment survey is exactly that — a survey –, the QCEW is a census which should in principle catch all covered employment, by way of tax records, etc. This data, among others, is used to benchmark the establishment series. The last preliminary benchmark applied to March 2022 (but not has yet been incorporated into the official series — I do this in this post). Notice that in Figure 2, the ratio dropped precipitously in early 2022, and jumped back up in June. This suggest to me that as of June, the nsa NFP series was not way off. Now, the QCEW lags considerably (data through June was published on November 22), so we can’t really use the QCEW to make judgments on data from July through November.

GIven this, what make of net employment growth — measured in different ways — since March 2022 (when the last benchmark month was)? In addition to the official BLS establishment NFP series, the QCEW series (seasonally adjusted by me) and the household series adjusted to the NFP concept are shown in Figure 2.

Figure 2: Change in employment from NFP (black), QCEW adjusted using Census X-11 seasonal adjustment by author (dark blue), QCEW using multiplicative moving average differences by author (sky blue), and using household employment series adjusted to NFP concept (red), all in 1000’s, relative to 2022M03. Source: BLS via FRED, BLS, BLS, and author’s calculations.

The research series on household employment adjusted to NFP concept is not an official series, and is described here. A caveat: given that the household employment series is based on a relatively small sample, the variability associated with it — and hence by extension its derivative series — is going to be relatively large.

Through June, it’s unclear whether NFP undercounts or overcounts relative to the QCEW number given the differing results provided by the seasonal adjustment process. The adjusted  household series indicates that through November, only about 800 thousand NFP jobs were created vs. 2700 thousand from the official NFP series.

One way to get around the seasonal adjustment problems (which have been compounded by the extreme drop associated with the pandemic) is to look at 12 month changes. This obviously downweights recent developments, but at least we get a look at the trends.

Figure 3: 12 month change in employment from not seasonally adjusted NFP (black), QCEW  (dark blue), and household employment series adjusted to NFP concept (red), all in 1000’s, relative to 2022M03. Source: BLS via FRED, BLS, BLS, and author’s calculations.

All three series match up pretty well through 2022M06. Reading up to 2022M11, both the NFP and adjusted household series show declines. Which one to believe? As noted earlier, Furman, 2016 and CEA, 2017 place almost total weight on the establishment series. A more formal analysis showing almost total weight on initial establishment series for real time analysis is provided by Goto, Jacobs, Sinclair and van Norder (2021). (As an aside, if I look at the final data for NFP and the adjusted household series, statistically the adjusted household series seems to respond to gaps between the two series, while the NFP series does not; formally, the adjusted series responds to an error correction term.)

So, for now, while I see it as an open question what (NFP) employment growth is, I think (1) it is likely positive, and (2) likely declining in pace.

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Rolex, Patek, And Audemars Piguet Watch Prices Continue Drop As Crypto Winter Worsens

Rolex, Patek, And Audemars Piguet Watch Prices Continue Drop As Crypto Winter Worsens

Global macroeconomic headwinds increasingly mount, such…

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Rolex, Patek, And Audemars Piguet Watch Prices Continue Drop As Crypto Winter Worsens

Global macroeconomic headwinds increasingly mount, such as high inflation, quantitative tightening by central banks, elevated cross-asset volatility, increasing recession odds, and the Russia-Ukraine war, as the new year quickly approaches. 

A few days ago, we pointed out that the newly minted crypto millionaires who panic-bought luxury vehicles are dumping Mercedes G-Wagons and McLaren supercars as crypto winter worsen with the implosion of FTX. And possibly the selling is spreading to other luxury items such as watches. 

Besides fancy vehicles, fast money bought watches during the pandemic boom, and lots of them. Prices for Rolex, Patek Philippe, and Audemars Piguet soared to astronomical levels, but as stocks, bonds, and crypto entered bear markets earlier this year, these watches began to drop in value. Earlier this year, we pointed out the top in the watch market in a note titled "Investors' Clock Out' Of Rolex Bull Market As Demand Cools." 

Now the Subdial50 index, an index tracking the top 50 most traded second-hand luxury watches on the pre-owned market, is making new lows, and according to Bloomberg, "has fallen to levels not seen since before an unprecedented boom in 2021 and early 2022." 

The decline shows the most sought-after watches from the top Swiss brands haven't been able to maintain lofty prices hit during the pandemic when cash-flush consumers stuck at home snapped up Patek Nautilus, Audemars Piguet Royal Oaks and Rolex Daytonas in a frenzied search for the next hot asset class. Dominated by Rolex references including the Daytona ceramic bezel chronograph and GMT Master II, the Subdial50 Index has declined by almost 5% in 12 months and nearly 17% in half a year.

The falling demand coincided with declines in technology stocks and the crash in cryptocurrencies.

Secondary market prices for the Royal Oak "Jumbo" reference 15202 soared above £110,000 ($134,840) at their peak in March, more than doubling over 12 months. Now the watch is trading at around £70,000. -Bloomberg 

Boom/bust chart of the luxury watch market. 

And with the economy headed for more turmoil next year, as Citi chief economist Nathan Sheets warned this week to clients, that could mean watch prices have yet to hit bottom. 

Tyler Durden Sat, 12/03/2022 - 08:45

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