Walk in the door of Hostess Brands’ flagship bakery in Emporia, Kansas and your first thought is: What a dump. The former front office for the bakery that pumps out classic American treats like golden Twinkies and swirl-topped Cup Cakes is a series of dank, near-empty rooms with scuffed, oatmeal-color linoleum floors, water-stained ceiling panels and a jumble of mismatched office furniture that looks like it was picked up off the curb. Three minutes in this place and you’re suddenly thankful for the wilted sign on the front door warning visitors that firearms are barred from the premises. ... This grim wing of the Hostess plant is a leftover from the old Hostess–the one that debt, pension costs and mismanagement shuttered in 2012. But throw on a hairnet and pass on to the newly rehabilitated factory floor ... The new factory is bright and clean. Tight rows of Twinkies m arch along the $20 million Auto Bake system with the precision of Soviet soldiers in a May Day parade. Yellow robotic arms, which look like they should be welding Teslas rather than boxing Twinkies, stack snacks with hypnotic rhythm. This 500-person plant produces more than 1 million Twinkies a day, 400 million a year. That’s 80% of Hostess’ total output–output that under the old regime required 14 plants and 9,000 employees. ... How they’d do it? Cherry–picking top assets, modernizing manufacturing and distribution, doubling the shelf life of products and capitalizing on the rare place in pop culture Hostess products still held.
To say Batista overreached would be to seriously undersell what has happened in the 18 months since that self-regarding presstravaganza of hubris and magical thinking. In what is shaping up to be one of the largest personal and financial collapses in history—if not the largest—Batista may be nearing bankruptcy. On Oct. 1, OGX missed a $45 million interest payment on bond debt it had racked up during its rise. Batista has sold his planes and his helicopter, and creditors are arguing over the remains of his companies. He’s no longer on the Bloomberg Billionaires Index and has become the butt of jokes in Brazil. One suggests that Pope Francis plans to return to Brazil soon and will again be visiting the poor, including Batista. … Brazil’s securities regulator has started an investigation into Batista and OGX after an investor alleged that Batista dumped 126.7 million OGX shares just before the company scrapped projects and warned that it may stop pumping crude next year. In a July op-ed for Brazil’s Valor Econômico newspaper, Batista said he would honor all of his obligations. In that same article, he put some of the blame on his auditing firm and executives for unreasonably building shareholder expectations. The company has denied it gave faulty advice. Once a staple on the airwaves and in print, Batista has mostly gone silent.
Most cities exist as a consequence of commercial or strategic utility. Atlantic City is more of a proposition and a ploy. The town fathers of Cape May, the first American seaside resort, weren’t interested in a railway, or perhaps the class of people who’d ride in on one—the well-to-do arrived from Philadelphia by boat—so a group of investors built, in 1854, what became known as a “railroad to nowhere,” to a spot a little way up the coast that was more or less the shortest possible distance from Philadelphia to the sea. Over the decades, and with the industrial-era advent of leisure time and disposable income, this forsaken wedge of salt marsh and sand became “the world’s playground”—a crucible of conspicuous consumption and a stage for the aspirations and masquerades of visitors and entrepreneurs. In some respects, Atlantic City was where America learned how to turn idle entertainment into big business. For a while, it was home to some of the world’s grandest hotels (the Marlborough-Blenheim was the largest reinforced-concrete building in the world, and was later imploded in the music video for Bruce Springsteen’s “Atlantic City”), as well as some of its more ardent iniquities and diversions. The night clubs were as often as not fronts for backroom gambling halls, intermittently tolerated by the authorities. ... Legalized gambling was supposed to rescue the city from its obsolescence as a resort and convention town ... When word gets out that a city is on the skids, people seem eager to imagine post-apocalyptic desolation, a rusting ruin at Ozymandian remove from the glory days. But American cities don’t seem to die that way. They keep sopping up tax dollars and risk capital, thwarting big ideas and emergency relief, chewing up opportunists and champions. ... “We will keep it in litigation for years. No one will get Revel.”
After an auction of many of his most iconic belongings, the Hollywood legend is back with a memoir about the famous people he worked with and loved. Ned Zeman tracks the Bandit down at his Florida mansion for a discussion about his career, his breakups (including that one with Sally Field), and what really cost him the most. ... Reynolds lived like a redneck Croesus, resplendent in velvet suits and silk bandannas. At his peak he was earning about $10 million a year. His real-estate portfolio included, in addition to Valhalla, a 153-acre ranch in Jupiter, Florida; a spread in Arkansas; mansions in Beverly Hills and Malibu; a Tara-like estate in Georgia; and a mountaintop retreat in the Smokies of North Carolina. He owned a private jet, a helicopter, and numerous custom-made sports cars ... Plus 150 horses. Plus well over $100,000 worth of toupees fashioned by Edward Katz, “the Armani of hair replacement.” ... But his personal life remains much smaller, and not in a bad way. “I feel like a man whose house was blown away in a hurricane. His possessions are gone, but he’s thankful to be alive.”
All told, the company spent more than $600 million. In its brief time in operation, it generated $2.3 million in revenue; when it filed for bankruptcy it listed assets of $58.3 million. ... The next generation of biofuels, made from plants and biowaste (so-called cellulosic materials), which have lower carbon emissions than oil, were a particular passion. Khosla invested hundreds of millions of dollars in about a dozen biofuel and biochemical companies. ... His ambitions were audacious. Khosla declared “a war on oil.” As he wrote in 2006, “I believe we can replace most of our gasoline needs in 25 years with biomass.” He dismissed incumbent energy companies in a 2007 interview as not investing heavily in biofuels because they weren’t “used to innovation and the rate of innovation we are likely to see in this business.” ... Unlike most failed startups, KiOR hasn’t just shut its doors and disappeared into oblivion. Today recriminations, investigations, and litigation continue to surround it. The Securities and Exchange Commission has been examining whether the company made false statements, including on a critical point: the yield of its biofuel (the amount that can be made per ton of wood chips). Two KiOR executives and Khosla himself are also facing a class action suit alleging that company executives misled investors about production volumes and yield. ... The state of Mississippi is also suing Khosla and key KiOR executives on similar grounds, claiming they hoodwinked the state to obtain a $75 million loan.
They accumulated even more debt of LyondellBasell Industries NV (LYB), the world’s largest manufacturer of polypropylene, before it filed for bankruptcy in January 2009. … The Lyondell bet paid off. The $2 billion Apollo sank into the company, whose products are used to make tires and bathroom fixtures, has turned into a $9.6 billion paper profit, the biggest gain ever on a private-equity investment, according to data compiled by Bloomberg. … That eclipses the $7 billion that Henry Kravis’s KKR & Co. reaped from the 1986 buyout of supermarket chain Safeway Inc. and a similar profit that a group led by financier J. Christopher Flowers reaped from the 2000 takeover of the predecessor to Tokyo-based Shinsei Bank Ltd.
The untold tale of Target Canada’s difficult birth, tough life and brutal death ... Fisher, 38 years old at the time, was regarded as a wunderkind who had quickly risen through the ranks at Target’s American command post in Minneapolis, from a lowly business analyst to leader of a team of 400 people across multiple divisions. Launching the Target brand in a new country was his biggest task to date. The news he received from his group that February afternoon should have been worrying, but if he was unnerved, Fisher didn’t let on. He listened patiently as two people in the room strongly expressed reticence about opening stores on the existing timetable. Their concern was that with severe supply chain problems and stores facing the prospect of patchy or empty shelves, Target would blow its first date with Canadian consumers. Still, neither one outright advocated that the company push back its plans. “Nobody wanted to be the one to say, ‘This is a disaster,’” says a former employee. But by highlighting the risks of opening now, the senior employees’ hope was that Fisher would tell his boss back in Minneapolis, Target CEO Gregg Steinhafel, that they needed more time. ... Nobody disagreed with the negative assessment—everyone was well aware of Target’s operational problems—but there was still a strong sense of optimism among the leaders, many of whom were U.S. expats. The mentality, according to one former employee, was, “If there’s any team in retail that can turn this thing around, it’s us.” ... Roughly two years from that date, Target Canada filed for creditor protection, marking the end of its first international foray and one of the most confounding sagas in Canadian corporate history. The debacle cost the parent company billions of dollars, sullied its reputation and put roughly 17,600 people out of work.
In 1976, the best surfers in the world began seeking Quiksilver because they were the best. The combination of Velcro, snaps and a high waistband made them grip hips and stay on, even in the largest waves. Before long, Hawaii-based Americans such as Hakman sported them. Soon, the surf mags were running photo after photo of pros gliding down famous waves such as Banzai Pipeline and Sunset Beach while wearing them—the best advertising imaginable. ... From its garage-like space, Quiksilver swelled. Within 10 years, it became the first publicly listed surfwear company; soon after, it opened boutiques in New York, Paris, London and Dubai. And by 2004, it announced annual earnings that exceeded $1 billion. ... the brand has crashed mightily ever since, leading up to this past Sept. 9, when Quiksilver sought relief in a Delaware bankruptcy court from $826 million in debt ... "Rossignol, I think, was the thing that killed Quiksilver in itself," Pezman says. "When you try to be all to everyone, you lose the support system. When you de-specialize, you lose your attraction to the specialized markets you had."
In an industry where no one knows anything, here, finally, was someone who seemed to know something: Ryan Kavanaugh, a spikily red-haired man-child with an impish grin and a uniform of jeans and Converse sneakers who had an uncanny ability to fill a room and an irresistible outlook on how to make money making movies. Not yet 30 when he founded Relativity Media in 2004, he very quickly became not only a power player in Hollywood but the man who might just save it. With a dwindling number of studios putting out ever fewer movies, other than ones featuring name-brand superheroes, Kavanaugh became first a studio financier and then a fresh-faced buyer of textured, mid-budget films. To bankers, Kavanaugh appeared to have cracked the code, having come up with a way to forecast a famously unpredictable business by replacing the vagaries of intuition with the certainties of math. ... Even Hollywood wasn’t used to a pitch this good. Kavanaugh alternately dazzled and baffled — talking fast, scrawling numbers and arrows and lines on whiteboards, projecting spreadsheets. ... Borrowing a tool from Wall Street, he touted his “Monte Carlo model,” a computer program that runs thousands of simulations, as a device that could predict a film’s success far more reliably than even a sophisticated studio executive. Better, Kavanaugh convinced several studios that he could raise more money for them if they gave him access to their guarded “ultimates” numbers showing the historical or projected performance of a film across all platforms (DVD, video-on-demand, etc.) over a number of years.
Three weeks ago, though, Sports Authority decided to liquidate instead of restructure; a spokesperson told Racked it was "pursuing a sale of some or all of the business." On Monday, the sports giant began auctioning off its assets. The winning bid belonged to a trio of liquidators (Hilco Global, Gordon Brothers, and Tiger Capital Group; Tiger Capital is also liquidating 41 Aéropostale stores in Canada), which will operate the company's going-out-of-business sales at all of its locations. ... Sports Authority isn't alone. Last month, Vestis Retail Group, the parent company of Eastern Mountain Sports, Bob's Stores, and Sport Chalet, filed for bankruptcy. With $500 million in liabilities, the company plans to close 56 stores, including all 47 Sport Chalet locations. Six months ago, the East Coast-based City Sports filed for bankruptcy and closed eight of its 26 stores. Although City Sports is currently being revived by Brent and Blake Sonnek-Schmelz, brothers who own the Soccer Post retail chain ... From the rise of the casual camper to the boutique fitness boom, it can feel like there have never been more people in the market for sports apparel. As of 2015, sporting goods stores in the US were bringing in as much as $48 billion in annual revenue, according to IBISWorld, up from $39.8 billion in 2012. Sports participation is up, too. According to Euromonitor, participation in high school sports has increased from 25 percent to 35 percent over the last 35 years, with nearly double the number of female students playing sports as compared to the 1980s. ... But there's a stark gap between an increasing customer base and many sports retailers — a gap that only continues to widen, no matter how many times companies see new ownership or rethink their businesses.
Even before all of Fuhu's money disappeared, Mitchell was having a doozy of a month. Three weeks before, he and his co-founder, Robb Fujioka--Fuhu's mastermind and headstrong president--had been contacted by attorneys representing the company's primary manufacturer, Foxconn. The Chinese giant was more than just a vendor. It was an investor and patron that had been instrumental in launching Fuhu on its meteoric rise. With gross revenue of $196 million and a three-year growth rate of 158,957 percent ... But behind the scenes, the company was falling apart. In recent months, it had racked up unpaid bills from just about everyone it did business with. And Foxconn--to which Fuhu owed between $60 million and $110 million, depending on who was counting--had finally reached its breaking point. The lawyers told Fujioka and Mitchell that until they paid their tab, their company would be cut off. ... The consequences of losing their supplier were laid out in a thick stack of a Tennenbaum loan agreement that the Fuhu bosses had never bothered to read. ... The rise and fall of Fuhu is a cautionary tale about the seductions of early success and the overconfidence it can breed. But most of all, it's the story of two entrepreneurs who pushed too hard to go big--one whose personal drive led him to take oversize risks against the advice of those around him, and one who failed to stop him.
American Apparel launched in 1988 as a T-shirt business that founder and former CEO Dov Charney ran out of his dorm room at Tufts University. After Charney opened his first retail store, on Los Angeles’s Sunset Boulevard in 2003, the brand quickly became a phenomenon, famous for its local, sweatshop-free manufacturing and notorious for its sexually charged advertising. ... As it became a public company in 2007 (through a reverse merger), American Apparel had 143 stores in 11 countries and was valued at nearly a billion dollars. ... It wasn’t just the merchandise that set the company apart. From the beginning, American Apparel eschewed fast fashion (the practice of copying new runway trends immediately and cheaply) in favor of generating its own iconoclastic staples. Instead of outsourcing manufacturing to low-wage overseas workers, it produced almost everything it sold for wholesale and retail in its own factory in Los Angeles ... Production and design now follow a strict calendar, set by Schneider. "You have to have your raw materials where they’re supposed to be, your bundling down, your product cut up and ready to sew—there are a thousand steps that go into making this run smoothly," Schneider says. "And it’s more complicated [at American Apparel] because you’re knitting your own yarn, you’re dyeing your own fabric, and you’re manufacturing everything here and shipping everything yourself." In part, as a result, niche items that fall outside of American Apparel’s knit-production expertise—sweaters, denim—are now being outsourced to other factories around Los Angeles.
Hundreds of shopping centers across the U.S. are facing obsolescence, abandoned by shoppers who are going online or getting choosier about where they shop. ... in its combination of novelty, technology, and customer pampering, Roosevelt Field embodies the strategy that has helped its owner, Simon Property Group, navigate retail’s crisis to stay on top of the mall world. ... Its U.S. portfolio includes 108 malls, most of them high-grossers like Roosevelt Field, and 72 discount outlet centers. ... including the Forum Shops at Caesars Palace in Las Vegas, King of Prussia outside Philadelphia, and the huge high-end New York outlet mall Woodbury Common ... The key to that success: constantly adapting to figure out what sells, at a time when many of the businesses that fill its malls—especially department stores and apparel retailers—aren’t selling. ... Simon dominates the so-called A-malls, those with the highest sales per square foot. To win in that category, Simon has been diligent about staying ahead of trends and modernizing its centers, and quick to replace struggling brands with those on the upswing. ... acknowledge the risk posed by the wave of store closings. ... Analysts generally believe America is “overmalled” to begin with: There are 2,353 square feet of space of shopping centers in the U.S. for every 100 Americans, compared with 1,636 in Canada and 458 in Britain ... From the 1960s through the 2000s, developers built hundreds of malls per decade. But since 2010, only nine new ones have been built ... the typical anchor store pays around $4 per square foot in annual rent; the average non-anchor tenant paid $42.22 per square foot a year as of the third quarter of 2016