Panama Paper Scandal Just Getting Started; Riding into the Pac Sun-set; How Victoria Secret Plans to Stay on Top

Paper fail…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

The Panama Papers continue their entertaining journey of embarrassing plenty of world leaders. For instance, British Prime Minister David Cameron has been haplessly defending himself after some documents in the Panama Papers unflatteringly revealed how he profited from his late father’s offshore investments, set up by scandalized Panamanian law firm, Mossack Fonseca. His father’s investment fund, Blairmor, shrewdly avoided paying taxes in the United Kingdom by having company board meetings in Switzerland and the Bahamas. Four months before David Cameron became the Prime Minister, he had the good sense to sell his stake for a not-so-whopping $42,000. The Prime Minister called the revelations a ”private matter” but then went on to say that all of his assets are totally legit.  Except it was said eloquently and with a British accent, which always makes things sound even better. Chinese Communist Party Leader Xi Jinping’s brother-in-law, in addition to a few other party members, also owned a piece of a Mossack Fonseca created shell company. But it’s doubtful Jinping’s power and status will be affected. Especially because the (shell) companies in question were conveniently gone with the wind by the time he assumed his leadership role. Interestingly, only one American has been spotted, so far, amongst the 11.5 million documents. It belongs to that of Chicago-based author Marianna Olszewski. But like I said, there are millions of documents to sift through so it could take awhile before other misbehaving Americans are discovered. Or not. These documents were from one but one firm out of hundreds or thousands of firms, both American and foreign, that perform these types of services. Besides, the U.S. is itself a tax haven. Just look no further than Nevada and Delaware. In fact, the U.S. is ranked as the world’s third most popular tax haven. Panama is much less popular, ranking way down at number 13.

Not so gnarly…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

SoCal-based company PacSun is the latest retailer to file for Chapter 11 bankruptcy after posting a $10 million net loss in its fourth quarter. The retailer only managed to nail a profit in just one quarter out of the last six. Add to that increased competition and you’ve got a whole big fiscal mess. But fear not, if you’re a frequent PacSun shopper, as there will be “no immediate impact” on customers at any of the chains approximate 600 stores. As for the retailer’s 2000 employees, their jobs are safe…for now, anyway. Pac Sun, incidentally, also carries the Kendall and Kylie Jenner line, just in case you felt like handing over your hard-earned cash to the Kardashian/Jenner/Kanye clan. Private investment firm Golden Gate will be the lucky group to take PacSun back to being a privately-held company. The investment firm previously lent Pac Sun $60 million back in 2011 and will now magically turn 65% of the company’s debt into equity. Okay, so there’s no magic involved, but there’s definitely some creative math at work. After its bankruptcy reorganization, the company will secure a $100 million revolving line of credit from Wells Fargo. The skate/surf California retailer owes plenty of cash to creditors including $5.7 million to Nike and another $3.8 million to Simon Property Group Inc., the mall operator that is home to many a PacSun stores. Shares of the company plunged as much as 97% in the past 12 months and took another nasty dive today, losing over 40% of its value at one point, as it hit 5 cents. The retailer will join a long and less-than-illustrious list of retailers who also recently filed Chapter 11, including Quiksilver, American Apparel, Wet Seal, Delia’s, Sports Authority…well, you get the grim picture.

In on the secret…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Victoria’s Secret (VS) is one retailer that is most definitely NOT filing for Chapter 11 bankruptcy. The company is actually at the top its fiscal game, posting a 3% sales gain over the previous year and record sales for 2015. But that isn’t stopping the insanely recognizable brand from making some pre-emptive changes, lest the retail climate fiscally change at some inconvenient point. Unfortunately, those changes involve some restructuring that will leave 200 employees without jobs in both the company’s New York and Ohio offices. Victoria’s Secret, whose parent company is L Brands, wants to streamline its operations by separating and concentrating on its top three units: lingerie, beauty and, of course, teen-centric brand, PINK. So what becomes of all the rest of Victoria’s Secret’s other categories of merchandise? They’re going buh-bye. VS, which also owns Bath & Body Works, plans to gradually shift gears away from its iconic catalog. Apparently, the internet managed to make the catalog, among other sales methods, a virtual relic – no pun intended.

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One response to “Panama Paper Scandal Just Getting Started; Riding into the Pac Sun-set; How Victoria Secret Plans to Stay on Top

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