The Limited Owner Almost Doubles Investment
Source: Reuters, via Fortune
The Limited Owner Almost Doubles Investment
Reuters
Updated: Jan 07, 2017 3:51 PM UTC
Sun Capital Partners Inc, the private equity owner of Limited Stores LLC, disclosed on Friday it has almost doubled its investment in the troubled U.S. women's apparel retailer, even as it announced that it will shut all approximately 250 The Limited stores amid losses.*
Sun Capital Partners told investors in a letter that it has made 1.8 times its $50 million investment in Limited Stores, thanks to prior distributions and dividends, according to an email to investors seen by Reuters.
Sun Capital also said in the letter that it is writing down the remaining equity value of Limited Stores to zero.
The disclosure illustrates how private equity firms can boast a profit from companies whose equity value has been wiped out, having previously recouped their original investment by taking dividends from these companies, often by having them borrow more money to fund the dividends.
* http://fortune.com/2016/12/21/thelimited-bankruptcy/
Read more: http://fortune.com/2017/01/07/limited-sun-capital-closing/
Previously at DU:
The Limited is closing all remaining stores by Sunday; all online sales are final
dhol82
(9,351 posts)And, I am certain they feel they deserve every penny.
democratisphere
(17,235 posts)madaboutharry
(40,149 posts)They started buying up other clothing companies like Victoria's Secret and Bath and Body Works. They lost focus and the stores become a mess. There was a time clothes from The Limited were well made and would last several seasons. Then they decided to go into the "teenage disposable clothing business" and it all went downhill. It's kind of sad.
It always amazing me how some people figure out a way to make money off a sinking ship.
catchnrelease
(1,941 posts)My friend and I would shop there all the time, in the 80s and 90s. Like you say, the clothing was very nice and usually on the pricey side. (We always shopped the sale rack, lol) I still have many pieces of clothing I bought from them, that I still wear. Same story with the GAP. Had cute sports wear that was well made. Then both stores changed their target market I guess. I know I got older, but what they started offering was just not appealing anymore. And just not the same quality. Sad.
Flatpicker
(894 posts)It's another one of those things when the investors buy up the name and then drain the value from the brand.
The Limited was doing ok until Sun got involved. Then the became part of that "brand family".
catchnrelease
(1,941 posts)I remember when Banana Republic was mainly travel type clothing and accessories, and well made. They went the same way as the ones mentioned above. Bought out by the people that have the GAP and now both have basically the same clothes. Crappy stuff from China and the value sucked dry so the investors can have more dividends.
CrispyQ
(36,225 posts)Then I got a job where I could dress in jeans & tee shirts - bye, bye Limited! It's been a long, long time since they left the mall I shop at.
TeamPooka
(24,155 posts)Mr.Bill
(24,103 posts)their only mistake was that they were too small time.
TeamPooka
(24,155 posts)He would sleep late, go to lunch at the diner, Elk's or Lion's Club.
Spent a lot of time at the track, OTB and Jai alai.
In high school he took me to Aquaduct for the day and Jimmy the Greek knew him by name.
So much drinking done by him and his buddies.
I worked for him part time in high school and I didn't install siding, he made me his driver because he hated it and could drink freely.
I have to re-watch that movie now.
doc03
(35,148 posts)keithbvadu2
(36,361 posts)Initech
(99,910 posts)turbinetree
(24,632 posts)they have pretty much explained why we are in this mess today and the law from 1949 for Hedge Funds
http://www.barlettandsteele.com/books/index.php
http://www.awjones.com/historyofthefirm.html
jgmiller
(383 posts)They come in purchase an asset maximize the profits at the expense of the business and then sell it to another PE firm or shut it down once they've gotten everything out of it they can. From a pure profit standpoint I can't really say I blame them, it's what they do. Unfortunately this is the modern business world, very few large companies care about running a good business these days. There is no long term thinking in what they do.
Grey Lemercier
(1,429 posts)The Limited 250
Aeropostale 154
American Eagle Outfitters 150
Chico's 120
Children's Place 200 (on top of the 125 shut in 2016)
Macy's 100
Men's Wearhouse/Jos. A Bank 250
Office Depot 300
Sears and Kmart 30 (immediately, possibly hundreds more latter on, Sears alone has closed over 2 THOUSAND stores in last 5 years)
turbinetree
(24,632 posts)from this, it's called a loss on the paperwork and the write-off generates more income flow to the top jerks, while at the other end of the pile this is whats happening to these human beings lost revenue to there social security benefit, because if some hedge fund ass**** decides to close the store and you have no job to go to, then when you get your statement from social security it shows how much you have earned and what your estimated outlay of the benefit will be, while the ass**** at the top will get the maximum benefit:
http://crooksandliars.com/2017/01/billionaires-celebrate-their-own-social