Latest news with #TimHynes
Business of Fashion
20-05-2025
- Business
- Business of Fashion
With Financing Push, Saks Global Looks to Buy Some Time
Saks Global's liquidity crunch has come to a head. Amid mounting concerns about the department store operator's ability to meet an interest payment due next month, a group of bondholders who own a majority of the department store operator's $2.2 billion debt formed a group over the weekend to provide new financing, according to media reports. A potential deal could see the group renegotiate its standing relative to other creditors, such as a higher interest rate or priority in a bankruptcy, in exchange for providing additional liquidity, a form of financing known as a liability management exercise. The group hired Lazard Inc. and Paul Weiss Rifkind Wharton & Garrison as advisers on the potential new financing, Bloomberg reported Sunday. Along with another loan, Saks Global could secure over $500 million in total liquidity, according to Debtwire global head of credit research Tim Hynes. That should be enough for the company to cover the June interest payment and pay vendors through the holiday season. What the financing won't do is address Saks' increasingly precarious positioning in the fashion marketplace. The company's relationship with many brands has soured since its acquisition of rival Neiman Marcus, which closed in December. After months of complaints about late or missing payments for merchandise, Saks announced in February it would make vendors whole by mid-2026, and pay for new merchandise within 90 days. Unpaid supplier invoices reached $1.3 billion as of last August, according to Debtwire. The vendor repayment plan was too little, too late for some brands, which have scaled back on the amount of inventory they send Saks and Neiman Marcus. Others, including some of the biggest European luxury labels, have pulled out of Saks' stores entirely in recent years, part of a wider trend that has seen high-end brands prioritise their own sales channels. Saks' sales have slowed and its cash position has worsened. According to documents obtained by Debtwire, the retailer generated $7.3 billion in sales in the 12 months ending Feb. 3, down 17 percent year on year. In that same period, earnings before interest, taxes, depreciation and amortisation fell 30 percent. Saks' bond, which was issued in December, traded at 48 cents on the dollar on Monday, and its value has fallen sharply in recent weeks as concerns about the company's financial health have escalated. 'This is the company's final gasp for air,' said distressed assets expert and ProChain Capital president David Tawil, of the weekend negotiations with creditors. Saks Global executives have projected strength publicly even as they negotiate emergency financing behind the scenes. At the World Retail Congress in London last week, executive chairman Richard Baker said the company now controls 60 percent of luxury distribution in the US. He said the Neiman Marcus acquisition will save the combined company over $600 million a year as it lays off staff, closes stores and cuts other costs. The problem, however, as reflected in Saks' plummeting bond value, is that investors are sceptical of its ability to pay down debts. Credit rating agency S&P Global placed Saks Global on negative credit watch, a step before downgrading its current CCC+ rating. 'Saks Global is significantly ahead on savings,' the company told BoF in a statement Monday. What's more, Saks is facing a vendor exodus as it continues to struggle with payment for orders, which will further strain both sales and cash flow. Saks' first round of payments on past-due balances will begin in July. But the company appears to be wavering on its commitment to pay for new merchandise within 90 days. While some brands told The Business of Fashion they have received prompt payment, one New York label that shipped merchandise to Neiman Marcus in February said it was told by the retailer last week that it would be paid within 120 days, rather than 90. The falling bond price and refinancing negotiations are also shaking vendors' confidence. Another American label, reacting to the news about Saks' liquidity issues, has proactively cancelled its orders for summer and fall. At the World Retail Conference, Baker said Saks plans to 'edit out' 500 to 600 brands from its stores' selection. He added the priority now is to focus on private labels as well as brands in which it has a controlled interest via its partnership with Authentic Brands Group, which owns the intellectual property of Hervé Léger, Brooks Brothers, Nautica and more. The idea is that with fewer but stronger brand partnerships, Saks Global would also have a stronger grip on markdowns, which have plagued American luxury retail in recent years. The company also recently opened a storefront on Amazon, though it sells only a fraction of its brands there. 'Now with our new structure, we're able to delay promotions, which is going to give our brand partners the chance to have more full price selling in their own stores,' said Baker. 'If we do this right, less inventory, less vendors, more margin and less promotion is going to make the entire industry in the United States healthier.' Baker and Salter also outlined their ambitions in building real estate developments around the world, combining the Saks name recognition with luxury hospitality. Salter said there are six or seven projects already in the pipeline, with opportunities in the Middle East and Asia Pacific. It will take time to boost sales and generate enough cash to be a self-sustaining business again. That's why securing additional capital from the bondholder majority group and the prospective loan is so important, Hynes said. He said Saks is likely to secure new financing because it still has assets to put up as collateral, including its intellectual property and its Fifth Avenue flagship, which a 2024 appraisal valued at $3.6 billion. Even if those plans fall through, Saks may be too big and well known to fail. 'If the company doesn't get the additional financing, then they wind up filing for bankruptcy,' Hynes added. 'But the company will still be around. It'll reorganise. Saks won't just disappear.'
CNN
26-02-2025
- Business
- CNN
Tropicana is in big financial trouble
Florida has been blasted with stronger hurricanes than ever before. A prolific disease carried by insects continues to devastate orange groves. And, on top of all that, consumers are watching their sugar intake. It's adding up to a disaster for Tropicana orange juice. Tropicana, founded in 1947 by an immigrant from Sicily who developed a process for freezing concentrated orange juice, is in financial distress and could be headed for bankruptcy. Tropicana Brands Group, which owns Tropicana, Naked, KeVita and other juice drinks, has seen sales and profit deteriorate in recent years. The company's revenue slipped 4% last quarter and its income dropped 10%, according to Debtwire, a financial services publication. Actions from its owners paint a much more dire picture. PAI Partners, a European private equity firm that took a controlling ownership stake in the company four years ago from PepsiCo, recently provided a $30 million emergency loan to Tropicana, 'showing that they are a lender of last resort,' and are 'not confident any value remains from their initial investment,' said Tim Hynes, the head of credit research at Debtwire. PepsiCo, which still owns a minority stake in the company, also said that it wrote down the value of its investment by $135 million last quarter. 'Tropicana's financial difficulties have raised concerns about how the company will manage its balance sheet,' Hynes said. 'Tropicana faces an uphill battle.' Tropicana and PAI Partners did not respond to CNN's requests for comment. Supply shortages in top orange-growing areas — worsened by climate change-influenced disasters like more severe hurricanes in Florida and intense droughts in Brazil — plus higher prices, competition and changes in Americans' diets have hammered Tropicana. The Department of Agriculture expects this year's orange production to be the lowest in 88 years. Orange production has become so tough that Alico, a major supplier to Tropicana, ended its citrus-growing operations. The company said last month that 'growing citrus is no longer economically viable for us in Florida,' with disease and hurricanes reducing its production by 73% over the last decade. Consumer trends have also hurt OJ. Customers are replacing orange juice with teas, sparkling water, sports drinks, energy drinks and other beverages that claim to be healthier or offer functional benefits like improved immune systems or energy levels, analysts say. Within the orange juice market, Tropicana is getting squeezed on the lower end by Coca-Cola's cheaper Minute Maid brand and the higher end by Simply, which has similar prices to Tropicana's and is grabbing consumers willing to pay more for orange juice, said Duane Stanford, the publisher of Beverage Digest. Tropicana is facing a 'cornucopia of challenges,' he said. Hurricane Milton battered Florida last year with deadly tornadoes, historic rain and high winds — and the storm was supercharged by climate change, according to a scientific analysis. It also devastated Florida's orange industry. Florida accounts for the majority of the oranges produced in the United States. 'Milton came across the center of the state and really impacted probably 70% of the most productive citrus acreage in Florida,' Matt Joyner, CEO of Florida Citrus Mutual, an advocacy group for growers, said last year. And it's not just atmospheric disasters that have devastated the industry. Orange production in the United States has declined in recent years due to the spread of citrus greening disease, a bacterial infection that cuts off key nutrients to orange trees, which first hit Florida in 2005. Trees infected with the disease produce fewer, lower-quality oranges and eventually die. Orange production in the United States was forecast to drop 10% in 2024 to 2.2 million tons due to weather and disease problems, especially citrus greening in Florida, according to the USDA. Production in Florida was forecast to drop 33%, while production in California was expected to drop 1%. Even as people have stopped buying as much orange juice, supply issues have led OJ prices to soar regardless. Orange juice prices have nearly doubled compared to 2020, reaching record highs in late 2024. The average price of a 12-ounce bottle of orange juice was $4.50 in January, up from $2.30 in January 2020, according to the Bureau of Labor Statistics. And those high prices are turning off customers even more, said Stephanie Mattucci, an analyst at market research company Mintel. Only 19% of US consumers think orange juice is a good value, according to a Mintel survey of 2,000 consumers in April for a report on juice drinks. Rising orange juice prices have come as prices on other foods, such as eggs, have surged. Customers at dollar stores are abandoning orange juice more quickly than shoppers at grocery stores, warehouse club stores and big-box chains, said Chris Costagli, a vice president and the food insights lead at market research firm NIQ. Dollar stores typically cater to lower-income customers, and the pullback there is a sign that the most price-sensitive shoppers are dropping orange juice, he said. Recently, rather than raising prices, Tropicana tried to address rising costs by shrinking its bottle. But the move backfired. Tropicana ditched its distinctive carafe, with its circular shape, thinning neck, and crown-like bottle cap. Over the summer, it rolled out a more traditional-looking plastic bottle and downsized the bottle from 52 ounces to 46 ounces. Tropicana also narrowed the label to fit the more compact bottle. OJ fans were frustrated about the new look and protested that Tropicana was ripping them off by selling smaller bottles. Tropicana told CNN at the time that the company changed the bottle to address feedback from customers, including making it easier to pour and store while reducing plastic in the cap. Consumers' changing ideas of health have also hurt orange juice and other fruit juice, which are relatively high in sugar and calories. Today, fresh-pressed green juices, enhanced water and protein-packed beverages are considered healthier than OJ. Conscious of changing tastes, Tropicana has attempted to stay ahead. In 2023, Tropicana launched a zero-sugar line. Tropicana also released limited-edition bottles without the letters 'A' and 'I' in its name ('Tropcn') to bring attention to its natural ingredients. The marketing stunt was aimed at highlighting the 'fact that there is nothing artificial, and never has been anything artificial' in the brand's orange juice. Tropicana is also shifting into faster-growing drinks. Last year, the company introduced Tropicana Refreshers, a line of non-orange juice drinks, and a line of sparkling drinks. But Tropicana's brand is synonymous with orange juice. Shifting customers' association with Tropicana after nearly 80 years is difficult, said Stanford from Beverage Digest. 'When so much of your business is focused around 100% orange juice, it takes some time to diversify.'
CNN
26-02-2025
- Business
- CNN
Tropicana is in big financial trouble
Florida has been blasted with stronger hurricanes than ever before. A prolific disease carried by insects continues to devastate orange groves. And, on top of all that, consumers are watching their sugar intake. It's adding up to a disaster for Tropicana orange juice. Tropicana, founded in 1947 by an immigrant from Sicily who developed a process for freezing concentrated orange juice, is in financial distress and could be headed for bankruptcy. Tropicana Brands Group, which owns Tropicana, Naked, KeVita and other juice drinks, has seen sales and profit deteriorate in recent years. The company's revenue slipped 4% last quarter and its income dropped 10%, according to Debtwire, a financial services publication. Actions from its owners paint a much more dire picture. PAI Partners, a European private equity firm that took a controlling ownership stake in the company four years ago from PepsiCo, recently provided a $30 million emergency loan to Tropicana, 'showing that they are a lender of last resort,' and are 'not confident any value remains from their initial investment,' said Tim Hynes, the head of credit research at Debtwire. PepsiCo, which still owns a minority stake in the company, also said that it wrote down the value of its investment by $135 million last quarter. 'Tropicana's financial difficulties have raised concerns about how the company will manage its balance sheet,' Hynes said. 'Tropicana faces an uphill battle.' Tropicana and PAI Partners did not respond to CNN's requests for comment. Supply shortages in top orange-growing areas — worsened by climate change-influenced disasters like more severe hurricanes in Florida and intense droughts in Brazil — plus higher prices, competition and changes in Americans' diets have hammered Tropicana. The Department of Agriculture expects this year's orange production to be the lowest in 88 years. Orange production has become so tough that Alico, a major supplier to Tropicana, ended its citrus-growing operations. The company said last month that 'growing citrus is no longer economically viable for us in Florida,' with disease and hurricanes reducing its production by 73% over the last decade. Consumer trends have also hurt OJ. Customers are replacing orange juice with teas, sparkling water, sports drinks, energy drinks and other beverages that claim to be healthier or offer functional benefits like improved immune systems or energy levels, analysts say. Within the orange juice market, Tropicana is getting squeezed on the lower end by Coca-Cola's cheaper Minute Maid brand and the higher end by Simply, which has similar prices to Tropicana's and is grabbing consumers willing to pay more for orange juice, said Duane Stanford, the publisher of Beverage Digest. Tropicana is facing a 'cornucopia of challenges,' he said. Hurricane Milton battered Florida last year with deadly tornadoes, historic rain and high winds — and the storm was supercharged by climate change, according to a scientific analysis. It also devastated Florida's orange industry. Florida accounts for the majority of the oranges produced in the United States. 'Milton came across the center of the state and really impacted probably 70% of the most productive citrus acreage in Florida,' Matt Joyner, CEO of Florida Citrus Mutual, an advocacy group for growers, said last year. And it's not just atmospheric disasters that have devastated the industry. Orange production in the United States has declined in recent years due to the spread of citrus greening disease, a bacterial infection that cuts off key nutrients to orange trees, which first hit Florida in 2005. Trees infected with the disease produce fewer, lower-quality oranges and eventually die. Orange production in the United States was forecast to drop 10% in 2024 to 2.2 million tons due to weather and disease problems, especially citrus greening in Florida, according to the USDA. Production in Florida was forecast to drop 33%, while production in California was expected to drop 1%. Even as people have stopped buying as much orange juice, supply issues have led OJ prices to soar regardless. Orange juice prices have nearly doubled compared to 2020, reaching record highs in late 2024. The average price of a 12-ounce bottle of orange juice was $4.50 in January, up from $2.30 in January 2020, according to the Bureau of Labor Statistics. And those high prices are turning off customers even more, said Stephanie Mattuci, an analyst at market research company Mintel. Only 19% of US consumers think orange juice is a good value, according to a Mintel survey of 2,000 consumers in April for a report on juice drinks. Rising orange juice prices have come as prices on other foods, such as eggs, have surged. Customers at dollar stores are abandoning orange juice more quickly than shoppers at grocery stores, warehouse club stores and big-box chains, said Chris Costagli, a vice president and the food insights lead at market research firm NIQ. Dollar stores typically cater to lower-income customers, and the pullback there is a sign that the most price-sensitive shoppers are dropping orange juice, he said. Recently, rather than raising prices, Tropicana tried to address rising costs by shrinking its bottle. But the move backfired. Tropicana ditched its distinctive carafe, with its circular shape, thinning neck, and crown-like bottle cap. Over the summer, it rolled out a more traditional-looking plastic bottle and downsized the bottle from 52 ounces to 46 ounces. Tropicana also narrowed the label to fit the more compact bottle. OJ fans were frustrated about the new look and protested that Tropicana was ripping them off by selling smaller bottles. Tropicana told CNN at the time that the company changed the bottle to address feedback from customers, including making it easier to pour and store while reducing plastic in the cap. Consumers' changing ideas of health have also hurt orange juice and other fruit juice, which are relatively high in sugar and calories. Today, fresh-pressed green juices, enhanced water and protein-packed beverages are considered healthier than OJ. Conscious of changing tastes, Tropicana has attempted to stay ahead. In 2023, Tropicana launched a zero-sugar line. Tropicana also released limited-edition bottles without the letters 'A' and 'I' in its name ('Tropcn') to bring attention to its natural ingredients. The marketing stunt was aimed at highlighting the 'fact that there is nothing artificial, and never has been anything artificial' in the brand's orange juice. Tropicana is also shifting into faster-growing drinks. Last year, the company introduced Tropicana Refreshers, a line of non-orange juice drinks, and a line of sparkling drinks. But Tropicana's brand is synonymous with orange juice. Shifting customers' association with Tropicana after nearly 80 years is difficult, said Stanford from Beverage Digest. 'When so much of your business is focused around 100% orange juice, it takes some time to diversify.'
CNN
26-02-2025
- Business
- CNN
Tropicana is in big financial trouble
Florida has been blasted with stronger hurricanes than ever before. A prolific disease carried by insects continues to devastate orange groves. And, on top of all that, consumers are watching their sugar intake. It's adding up to a disaster for Tropicana orange juice. Tropicana, founded in 1947 by an immigrant from Sicily who developed a process for freezing concentrated orange juice, is in financial distress and could be headed for bankruptcy. Tropicana Brands Group, which owns Tropicana, Naked, KeVita and other juice drinks, has seen sales and profit deteriorate in recent years. The company's revenue slipped 4% last quarter and its income dropped 10%, according to Debtwire, a financial services publication. Actions from its owners paint a much more dire picture. PAI Partners, a European private equity firm that took a controlling ownership stake in the company four years ago from PepsiCo, recently provided a $30 million emergency loan to Tropicana, 'showing that they are a lender of last resort,' and are 'not confident any value remains from their initial investment,' said Tim Hynes, the head of credit research at Debtwire. PepsiCo, which still owns a minority stake in the company, also said that it wrote down the value of its investment by $135 million last quarter. 'Tropicana's financial difficulties have raised concerns about how the company will manage its balance sheet,' Hynes said. 'Tropicana faces an uphill battle.' Tropicana and PAI Partners did not respond to CNN's requests for comment. Supply shortages in top orange-growing areas — worsened by climate change-influenced disasters like more severe hurricanes in Florida and intense droughts in Brazil — plus higher prices, competition and changes in Americans' diets have hammered Tropicana. The Department of Agriculture expects this year's orange production to be the lowest in 88 years. Orange production has become so tough that Alico, a major supplier to Tropicana, ended its citrus-growing operations. The company said last month that 'growing citrus is no longer economically viable for us in Florida,' with disease and hurricanes reducing its production by 73% over the last decade. Consumer trends have also hurt OJ. Customers are replacing orange juice with teas, sparkling water, sports drinks, energy drinks and other beverages that claim to be healthier or offer functional benefits like improved immune systems or energy levels, analysts say. Within the orange juice market, Tropicana is getting squeezed on the lower end by Coca-Cola's cheaper Minute Maid brand and the higher end by Simply, which has similar prices to Tropicana's and is grabbing consumers willing to pay more for orange juice, said Duane Stanford, the publisher of Beverage Digest. Tropicana is facing a 'cornucopia of challenges,' he said. Hurricane Milton battered Florida last year with deadly tornadoes, historic rain and high winds — and the storm was supercharged by climate change, according to a scientific analysis. It also devastated Florida's orange industry. Florida accounts for the majority of the oranges produced in the United States. 'Milton came across the center of the state and really impacted probably 70% of the most productive citrus acreage in Florida,' Matt Joyner, CEO of Florida Citrus Mutual, an advocacy group for growers, said last year. And it's not just atmospheric disasters that have devastated the industry. Orange production in the United States has declined in recent years due to the spread of citrus greening disease, a bacterial infection that cuts off key nutrients to orange trees, which first hit Florida in 2005. Trees infected with the disease produce fewer, lower-quality oranges and eventually die. Orange production in the United States was forecast to drop 10% in 2024 to 2.2 million tons due to weather and disease problems, especially citrus greening in Florida, according to the USDA. Production in Florida was forecast to drop 33%, while production in California was expected to drop 1%. Even as people have stopped buying as much orange juice, supply issues have led OJ prices to soar regardless. Orange juice prices have nearly doubled compared to 2020, reaching record highs in late 2024. The average price of a 12-ounce bottle of orange juice was $4.50 in January, up from $2.30 in January 2020, according to the Bureau of Labor Statistics. And those high prices are turning off customers even more, said Stephanie Mattuci, an analyst at market research company Mintel. Only 19% of US consumers think orange juice is a good value, according to a Mintel survey of 2,000 consumers in April for a report on juice drinks. Rising orange juice prices have come as prices on other foods, such as eggs, have surged. Customers at dollar stores are abandoning orange juice more quickly than shoppers at grocery stores, warehouse club stores and big-box chains, said Chris Costagli, a vice president and the food insights lead at market research firm NIQ. Dollar stores typically cater to lower-income customers, and the pullback there is a sign that the most price-sensitive shoppers are dropping orange juice, he said. Recently, rather than raising prices, Tropicana tried to address rising costs by shrinking its bottle. But the move backfired. Tropicana ditched its distinctive carafe, with its circular shape, thinning neck, and crown-like bottle cap. Over the summer, it rolled out a more traditional-looking plastic bottle and downsized the bottle from 52 ounces to 46 ounces. Tropicana also narrowed the label to fit the more compact bottle. OJ fans were frustrated about the new look and protested that Tropicana was ripping them off by selling smaller bottles. Tropicana told CNN at the time that the company changed the bottle to address feedback from customers, including making it easier to pour and store while reducing plastic in the cap. Consumers' changing ideas of health have also hurt orange juice and other fruit juice, which are relatively high in sugar and calories. Today, fresh-pressed green juices, enhanced water and protein-packed beverages are considered healthier than OJ. Conscious of changing tastes, Tropicana has attempted to stay ahead. In 2023, Tropicana launched a zero-sugar line. Tropicana also released limited-edition bottles without the letters 'A' and 'I' in its name ('Tropcn') to bring attention to its natural ingredients. The marketing stunt was aimed at highlighting the 'fact that there is nothing artificial, and never has been anything artificial' in the brand's orange juice. Tropicana is also shifting into faster-growing drinks. Last year, the company introduced Tropicana Refreshers, a line of non-orange juice drinks, and a line of sparkling drinks. But Tropicana's brand is synonymous with orange juice. Shifting customers' association with Tropicana after nearly 80 years is difficult, said Stanford from Beverage Digest. 'When so much of your business is focused around 100% orange juice, it takes some time to diversify.'
