L.L.Bean CEO Stephen Smith says that middle market retail "needs attention in the next stimulus package for sure.” <https://www.cnbc.com/2020/03/30/ll-bean-ceo-congress-must-do-more-to-address-serious-retail-crisis.html>
A reader question:
The news just keeps getting more interesting. I saw this today and thought of SWNE. What do you think about L.L. Bean getting a government bail-out? Freeport is a ghost town, and I read on your blog that they had been investing in new stores <https://www.llbean.com/llb/shop/1000001703>, and that must leave them even more vulnerable. Still, in every interview, L.L Bean seems to play the victim. I wonder what Linda Bean would think about corporate socialism. Is a decision one way or the other influenced at all by the fact that L. L. Bean hardly employees any U.S. based manufacturers anymore? I am curious what your readers think. Thank you!
LL Bean deserves to survive.
ReplyDeleteAll retail clothing stores seem to be in trouble. But I think the PPP should go to actual small businesses (not Ruth Chris Steakhouse or Shake Shack). How about the independent restaurants or dry cleaners or bike rental shops, etc. that could really use the help. The world's economy is going to be in big trouble but corporations will survive without the largess of Uncle Sam. How about we give the little guy a break?
ReplyDeleteCapitalism used to have an ethos where those companies that focused on meeting the needs of their clientele, had a long-term perspective, developed their products and their employees, and practiced sound financial management were the companies that thrived in good times and survived in downturns. That seems no longer to be the case and probably hasn't been for several decades. The so-called socialism in this democracy has been heavily tilted towards corporate socialism. Fed chair Powell's recent statement captures this well (paraphrased): The coronavirus isn't the fault of companies and we need to make them whole. Really?
ReplyDeleteWhat do they think will happen when the Fed's propping of the markets via a hard floor zero interest rate and QE infinity stops? It surely ain't gonna be pretty and it will have to stop or we will likely be facing hyperinflation.
In my mind we are perched on the edge of a precipice staring down at the abyss. It looks very dark down there.
LL Bean is an exemplar of a good company run amok, focusing on fat, fat short term profits at the expense of its heritage, its products, its workers, and its community. Now they and companies like them cry for a bail out.
The trillions now being spent will be born by our children and our grand children. If I thought there was significant public value to it, I'd be more supportive. Much of this money will be used only to keep the status quo going, as we are already seeing. I'm not in favor of that at all. Come to us with a plan about how it will help the company, its workers, community, and this country and I'll be all for it. I am not in favor of simply lining the pockets of the upper echelon with public money. Period.
Aiken
Again, Aiken said it best! Couldn't agree more.
DeleteLL Bean, Macy's, Nordstrom, etc., were already in trouble financially. New York State and Illinois State were already in trouble financially. I don't think that these entities should used the virus as a way to make themselves well.
DeleteWell said, Aiken!
DeleteSeems that some of the ppp has gone to college with rather large endowments as well. I think this is just wrong. Go to the little Mom and Pop stores. They are the ones that need it.
ReplyDeleteThank you, Aiken. I don't think I could have said it better.
ReplyDeleteIn recent years many companies have gone all in on maximizing efficiency for the sake of maximizing short term (quarterly) profits. They use just-in-time supply chains with no built in redundancies for the critical links, no excess manufacturing or storage capacity and almost no cash reserves. This is great for maximizing short term profits but it leaves them fragile and vulnerable to big shocks. Capitalism is about competition and survival of the fittest. If L.L. Bean goes out of business and there is still demand for what they sold, other companies will come along to supply that demand.
ReplyDeleteBean has lost much of its distinctiveness. I'm guessing the company would be in better shape if it hadn't given so many people ample reason to decide they might just as well make their purchases elsewhere. Maybe we should let companies pay the price for selling their souls in order to be perceived as cool.
ReplyDeleteSpin off (and grow) the boot business, they could literally get back to their roots. Other than that, I'm not sure there's a real reason for LL Bean to continue, if they're so mismanaged that they can't survive this.
ReplyDeleteL.L. Bean went down the shitter years ago because it chose to adopt a business model that put profit margins over the production of quality products and serving loyal customers. Let L.L. Bean burn.
ReplyDeleteNo bailout for LLB.
ReplyDeleteAgree with the foregoing. Time for Bean to fold.
ReplyDeleteSocializing losses and privatizing profits.
ReplyDeleteBlissfully sequestered on several acres in NE GA praying for an end to this scourge. Please stay safe one and all.
From the other side of the State - Amen.
DeleteTough call...it seems as though iconic brands that are part of the American fabric are dropping like flies. From my recollection Freeport, Maine was LLBeantown. What are they going to do?
ReplyDeleteAbsolutely not!! LL Bean isn't an American fashion icon anymore and hasn't been for many years. Stephen Smith's vision has never been about loyalty to the brand, employees or our great country. Companies like LL Bean chose to sell their soul for the path of least resistance. Failing may be the best thing for them and our country ( and our fashion).
ReplyDeleteI haven't purchased anything from Bean in three years. When my Bean Bucks accrue, I order another "free" canvas tote.
I haven't purchased from them either. If I did, the canvas tote would be about the only thing I could find. I know that I'm done with a retailer when I ask myself, "If I could have anything for free, what would I want?" At the point, the answer usually is "Nothing."
DeleteJacqueline
Kind of angry, aren't we? Bean's was not a fashion icon until fairly recently, and that is, I think, where they began to overextend the company. They employ many people here in Maine, so they're important to the economy. They also donate to many commendable causes. A little contraction might not hurt, but I don't think they require federal assistance. Indeed, this handout is looking more and more like a major boondoggle.
DeleteFortunately, the government isn't including clothing quality or style in the ppp criterion. Since I don't have access to LL Bean's finances, I can't say the extent to which they may qualify for a ppp loan.
DeleteWell, even in its current form I never would have considered LLBean "Fashion". Leave that to Hilfiger and others who put 4 inch heel on the "Duck" boot for Pete's sake! The key to their success was their utilitarianism and quality. Like other brands perhaps the latter went by the wayside. Sad to see it go at any rate.
DeleteI would really hate to see them go.
ReplyDeleteWhen the automobile industry needed a bailout, they were forced to eliminate models and brands. If LLB does get money it should be for the items they manufacture in the US.
ReplyDeleteDavid J Cooper
Did that really happen? All I saw was US auto manufacturers giving up market to imports. I wouldn't be surprised that every Pontiac, Oldsmobile, Saturn and Mercury dealer (maybe even Desoto)is selling Korean cars now. Sure, there were logical reasons to narrow the number of brands but was it a good idea?
DeleteAgree.
DeleteI'm old enough to recall the beating of the "buy american" drum to encourage blindly patriotic simpletons to buy K-cars instead of the more affordable, more reliable and more attractive foreign counterparts. Interesting to see this nonsense continues to this day.
DeleteLarger companies, with known brand names, have access to capital markets that small, local businesses do not. So, LL Bean could easily float a bond issue to provide them with needed working capital. That's not an option for small local businesses with less than 100 employees.
ReplyDeleteSo, to answer the question, no, LL Bean shouldn't get a PPP loan.
How ungrateful some people are!
ReplyDeleteLLB preserved, protected, and defended Trad/Ivy style for all of us for years on end!
Sadly Bean followed the retail herd, where more product instead of better product has become the norm. Incompetent management should not be rewarded by tax dollars, if a business can’t sustain its viability after just 6-8 weeks of slowed business, the question is then, is it a viable business at all. Once Bean moved away from their core “outdoor” business someone decided volume was the future. Bean can very easily continue being a profitable, sustainable business by shedding product, even expanding the dedicated work force to continue to produce high quality product right in their own back yard. But is that the goal, or will it follow the latest trend, fire sale, million dollar management bonus, move on?
ReplyDeleteI don't know if they deserve money. I do know they employ a LOT of people in Maine in the flagship store, call center and manufacturing in Freeport and Lewiston, that they are considered an excellent company to work for in a low-wage state, and that they have been packing the food boxes that are keeping a lot of children and families in the state fed right now. Are these reasons TO give them money? I don't know.
ReplyDeleteI don't care for Linda Bean's politics and they've been making some questionable clothing design and marketing decisions, but I don't know that those are reasons to NOT give them money.
This shouldn't be about fashion. The money is to keep employees employed and the downstream companies in the supply chain in business.
ReplyDeleteIf you actually went to LL Bean, rather than armchair shopping, you would see the many small companies they support in their stores. Especially the flagship. Their buyers shop local trade shows and many of the products in their home store are made in Maine and New England. Whether or not this qualifies them for the PPP, they do very good things for the state and region.
ReplyDeletePatsy,
DeleteI can’t disagree with you. I’ve been to Bean’s flagship store many times over the years. What you say is true. They do support a lot of small businesses and have been good for Maine. That’s quite evident.
What is also true is that Bean’s has an annual revenue of about $1.6 billion. The Bean family has net worth of approximately $2 billion (all this is public info). With those sorts of resources, they should be able to weather the storm. Surely, government assistance will help. But how is it really helping? Will their net worth drop significantly? With government help, probably not. Contrast with the small business with revenue of, for example, $750K to $3-5 million. Without government assistance, the business will more than likely go under and because their assets are likely tied to their business (typical with entrepreneurs), they will go under, too.
Favorable tax treatment, zero interest loans, de-regulation, unlimited quantitative easing, and government assistance all favor the large corporations. And now, in a crisis, it becomes evident this is working against the little guy or gal struggling to run a business. They simply can’t compete. To me, this is corporate socialism. I am a capitalist through and through; but, I see this as unfair. It also promotes excess in the system. It will all unwind at some point (it always does) and when it does, we are all going to suffer. I am not against Bean’s or any company. I just want to see a level playing field.
And one more thing, it would be much more enjoyable to debate this over a glass of wine or beer at the Broad Arrow! It might take several sessions for one of us to change our minds, though, because, you know, New Englanders.
Stay safe, Patsy.
Aiken
Yes! I'm always up for a lively debate over a beverage! And agreed - that large businesses are gobbling the lion's share is unconscionable.
DeleteYou stay safe as well, Aiken!
Corpate bailouts and corporate welfare mean nothing if there aren't purchasers. These days there are way fewer people who can buy little else besides inflated groceries. Not everyone works in a factory (especially if those factories are overseas). Why don't these companies have "rainy day" funds like every one is supposed to? The money should go to citizens first--$1200 isn't going to cut it and not everyone is eligible for unemployment. And today it struck me how little I actually need in life--not missing much. What did we buy before this crisis? Not a whole lot that we actually need. Focus the money on what people do need.
ReplyDelete