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Rumor
has it that Twinkies have an infinite shelf life*, but unfortunately the
maker of the famous snack may not enjoy such longevity.
Hostess Brands Inc, the company that makes Twinkies and Wonder Bread, has filed for Chapter 11 bankruptcy protection, blaming high debt and labor costs:
The privately held Irving, Texas, company's move marks the second significant court restructuring in the past several years. In a statement, Hostess said the current cost structure "is not competitive, primarily due to legacy pension and medical benefit obligations and restrictive work rules." It said it would be able to maintain operations thanks to a $75 million financing commitment from a group of lenders.
In bankruptcy, Hostess said it plans to continue negotiating with 12 unions to modify the collective-bargaining agreements governing the employment of its union workers, who comprise 83% of its approximately 19,000 employees.
Better stock up on Twinkies! Link - via Metafilter
* Declared false by Snopes, but we still suspect that you can safely eat a Twinkie much longer than its purported expiration date
My
neighborhood Borders is closing - it's a big blow to our local mall and
movie theater complex. The rumor of Borders bankruptcy had swirled around
for a while before it actually happened, so the store closing wasn't exactly
a surprise. It still sucks for our local economy and psyche, though.
Recently, Mark Evans, Director of Merchandise Planning & Analysis for Borders outlined 6 reasons why he thought Borders failed. For example:
Failure to build efficient systems and processes - While Borders legendary "expert system" was considered cutting edge and an advantage early on, the company failed to successfully build upon this foundation and create new, better assortment, replenishment, and supply chain systems and processes to keep pace with the changing state of technology and efficient retail operations. B&N invested considerable time/energy/money through the 90's in systems and processes. To provide one example, a lower ranked title that sells out in a B&N will be replenished from a central warehouse within 2-3 days. The same process could take up to 16 weeks for Borders. Borders sought to upgrade systems with two large efforts in the 00's: first one was a home grown effort called Common Systems. Second was a "buy and integrate" project to implement Retek and E3. Both failed spectacularly. The Retek effort dramatically hurt the Walden chain, the only business unit that was managed by the system. With both of these efforts, large sums of money and, perhaps more importantly, human resources and time were squandered.
I read through all his 6 reasons (TLDR: lack of Internet sales, overspent on real estate, invested in music CDs as that sector cratered, carrying too large assortment of books, failure to reorder things that sell well, branding failure) - and noticed one conspicuous absence: they didn't mention their customers at all!
Our local Borders had terrible customer service (I remember the exact moment that Borders lost me as a customer: a manager once implied that I was stealing when I tried to return a book without receipt!)
Link - via Boing Boing
Do you agree with Mark Evans? Why do you think Borders went bankrupt?
(Photo: iSharQ [Flickr] - actually, this is quite an interesting photo - see the title of the book Haje Jan Kamps added to the bottom of the sign on Flickr)
1. Henry Ford’s Bumpy Road
Henry Ford probably wouldn’t be too judgmental about about his company’s recent financial troubles. Particularly because he was no stranger to debt himself. When Ford first started the Detroit Automobile Company in 1899, the young engineer was a little too obsessed with perfection. In two years, the plant produced just twenty cars. The poor output, combined with exorbitant costs, wasn’t a recipe for success. By 1901, his enterprise had gone bankrupt. Not one to wallow in self-pity, Ford reorganized his talent under a new name, the Henry Ford Company, but soon left to start yet another group-the Ford Motor Company. And that’s where he finally started to make the real money.
Whatever happened to the Henry Ford Company? It did alright for itself. The group changed its name to the Cadillac Automobile Company.
2. Hershey’s Bitter-to-Sweet Success
Milton Heshey knew he could make great candy, but running a great business was more daunting. Hershey, who didn’t have a formal education, spent four years apprenticing in a Philadelphia candy shop before striking out on his own in 1876. Six years later, his business went under. This wasn’t the last time Hershey would go broke. A subsequent attempt to peddle sweets in New York City met the same fate, and the penniless Hershey returned home to Lancaster, Penn. There, he started tinkering with the use of fresh milk in caramel production. And out of nowhere, sweet success! In 1900, Heshey sold his Lancaster Caramel Company for an eye-popping $1 million. But the restless entrepreneur wasn’t done yet. He immediately began work on a new idea-manufacturing a Swiss luxury import known as “milk chocolate”.
3. The Burt Reynolds Bachelor Pad
Back in the 1970s, Burt Reynolds owned mansions on both coasts, a helicopter, and a lavish ranch. But the next decade was harder on the Hollywood star. Thanks to a pricey divorce and some poor career choices, Reynolds ended up owing creditors almost $10 million. In 1996, he filed for Chapter 11.
But instead of hawking his valuables and putting his trademark mustache up for auction, Reynolds found a loophole to protect his wealth. In states such as Florida and Texas, there’s a homestead exemption that protects debtors from losing their primary residence. The problem was, Burt Reynolds’ shelter happened to be a sprawling $2.5 million Florida mansion. The issue caused such a stink that when Congress passed measures tightening the loopholes in 2001, Reynolds was one of the examples Senators used to show that bankruptcy rules went too easy on the wealthy.
_______________________
The above article was written by Ethan Trex. It is reprinted with permission from the Scatterbrained section of the May/June 2010 issue of mental_floss magazine.
Be sure to visit mental_floss‘ entertaining website and blog for more fun stuff!
They earn millions playing pro sports and doing product endorsements, yet consider these startling statistics:
Similar to lottery winners, with no financial prowess or discipline, most pro athletes go completely broke in less than 10 years after retirement.
In fact, 60% of retired basketball players go broke in 5, and 78% of football players in 2! Athletes are forced to sell their homes, sell their championship rings, and file for bankruptcy.
Here’s an interesting article on the 6 main reasons pro athletes go broke after their careers are over: Link
From the Upcoming 
ueue, submitted by 
Circuit City, Linens ‘n Things, and Levitz are all victims of the economic crisis – and the question in everybody’s mind is: who’s next?
Yahoo! Finance has a somber article about 15 companies that are in such
precarious financial conditions that they might not survive 2009. For example:
Sbarro. (Privately owned; about 5,500 employees). It’s not the pizza that’s the problem. Many of this chain’s 1,100 storefronts are in malls, which is a double whammy: Traffic is down, since consumers have put away their wallets. Sbarro can’t really boost revenue by adding a breakfast or late-night menu, like other chains have done. And competitors like Domino’s and Pizza Hut have less debt and stronger cash flow, which could intensify pressure on Sbarro as key debt payments come due in 2009.
Krispy Kreme. (KKD; about 4,000 employees; stock down 50%). The donuts might be good, but Krispy Kreme overestimated Americans’ appetite – and that’s saying something. This chain overexpanded during the donut heyday of the 1990s – taking on a lot of debt – and now requires high volumes to meet expenses and interest payments. The company has cut costs and closed underperforming stores, but still hasn’t earned an operating profit in three years. And now that consumers are cutting back on everything, such improvements may fail to offset top-line declines, leading Krispy Kreme to seek some kind of relief from lenders over the next year.
