Well, as you may have heard, what with massive global economic distress, it’s a dicey time right now for everyone. Comics and graphic novels seems to be riding their wave of growth for now, but no one who is following the news thinks the comics biz will get a pass. There could be big changes if, as many observers expect, Borders goes under. An article at The Motley Fools picks three retailers who might go out of business this year: Electronics store Circuit City, clothing retailer Talbots, and Borders.
There’s more red to Circuit City than the color of its storefront. The retailer was suffering even when the economy was chugging along, as consumers looked elsewhere for deals on electronics. And Borders may be working on paying down its debt, but with a quick ratio of just 0.1, this is one heck of a risky investment. A quick ratio beneath 1.0 can serve as a major warning flag, particularly if a company’s sales and profit margins are suffering and its inventories may have to go on clearance sale.
All three of these companies have several years of falling sales, falling profit margins, and lack of profitability. Circuit City and Talbots reported negative operating income in the last 12 months, meaning neither boasts the ability to cover interest expenses with operating income. Throw in a major economic crisis and a lot of terribly frightened, cash-poor, credit-constrained consumers, and the headwinds look perilous this holiday season.
The end of Circuit City would also mean reduced outlets for anime DVDs.