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Gymboree is the most recent retail domino to fall

(BUSINESS NEWS) As online shopping popularity increases, mall stores are left struggling to stay in alive and Gymboree has just been added to the endangered stores list.

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There goes another one!

Before the clothing mill stops, the rumor mill starts.

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Gymboree, the troubled children’s clothing retailer, will be shuttering hundreds of stores across the U.S. as it prepares to seek Chapter 11 bankruptcy court protection. Although the company has made no official announcement, the official filing is expected very soon.

Big losses

The bad news from the retail sector keeps coming. It’s no longer just iconic 90s retailers like Bebe, BCBG, Kenneth Cole, Wet Seal, Limited, or American Apparel that are now biting the dust, it is becoming clear other classic mall occupants would become part of the brutal culling as well. Much of their misfortune comes from the rise of online shopping, and efficient competitors like Amazon.com Inc., and Target Corp.

News of Gymboree bankruptcy filings were already reported last month by the Wall Street Journal and Bloomberg, as the struggling retailer faces a June 1 interest payment on its debt.

Gymboree has not posted a profit since 2011. Its losses total more than $872 million. In the second quarter of Fiscal year 2017 alone, Gymboree had a net loss of $324.9 million.

The exact number of store closures seems to be up in the air.

As recently as July 2016, Gymboree and its branded outlet stores “Janie and Jack” and “Crazy 8” accounted for 1,300 stores, SEC filings show. As many as 350 of them may be shutting down.

The latest financial report had bad news from every single sector. “The decrease in gross profit quarter-over-quarter was driven primarily by a decrease in comparable store sales (5 per cent decrease) attributable to the Gymboree and Crazy 8 brands, an $11.6 million charge related to excess inventories, incremental distribution costs totaling $2.4 million related to expedited shipping costs during the holiday period, and an increase in promotional (markdown) activities,” the company said.

No where near the black

To narrow its focus on just apparel, Gymboree sold its play-center business last year to a Singaporean investment group for $127.5 million. But it has done little to relieve the company from its massive debts that it incurred from a buyout by Bain Capital for an estimated $1.8 billion. The company has only $9.7 million cash on hand, according to March SEC filings.

From the dire numbers, it is now inevitable that a brutal restructuring, much like the recent bankruptcy filings of Payless Shoes, is about to follow.

If Rue21 does not file for bankruptcy first, Gymboree’s filing will be the fifteenth retail bankruptcy so far this year.

And it isn’t even Memorial Day yet!

#mallperils

Barnil is a Staff Writer at The American Genius. With a Master's Degree in International Relations, Barnil is a Research Assistant at UT, Austin. When he hikes, he falls. When he swims, he sinks. When he drives, others honk. But when he writes, people read.

Business News

How SmileDirectClub uses NDAs to silence bad reviews

(BUSINESS NEWS) SmileDirectClub wants to tell you, in the land of freedom of expression, how to talk about their service even if a dentist has to fix their mistakes.

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Bad reviews can hurt any business, which is why many companies will go out of their way to ensure a customer is pleased. A restaurant might offer to replace a bad meal free of charge, for instance. A business might send customers additional free products to make up for any mistakes. SmileDirectClub, on the other hand, has taken a different approach to handling bad reviews: non-disclosure agreements.

SmileDirectClub is an aligners company that positions itself as a cheaper alternative to braces. It’s also an online company. All of this work is done remotely, with customers getting their aligners mailed to them. So, cheap and convenient. What’s not to love?

Well, turns out there might be trouble in paradise. According to an article by the New York Times, “SmileDirectClub has been the subject of more than 1,670 Better Business Bureau complaints since 2014.” In comparison, Invisalign, SmileDirectClub’s competitors, has only had five complaints over the last twenty years.

Many report that SmileDirectClub’s aligners don’t work and some have even claimed the aligners made things worse. Yeah, that’s right. Some people paid for SmileDirectClub just to turn around and have to pay an actual orthodontist just to get back to normal.

So, naturally, SmileDirectClub is having some customers sign NDAs, which according to the New York Times includes the following: “[customer] will not make, publish, or communicate any statements or opinions that would disparage, create a negative impression of, or in any way be harmful to the business or business reputation of SDC or its affiliates or their respective employees, officers, directors, products, or services.”

Non-disclosure agreements are just one way that big companies will try to silence bad reviews. Another method is to file a lawsuit for copyright infringement. GoPro attempted this method a few years ago. Companies can also claim that bad reviews are slander written in bad faith, which is a method many organizations have abused.

It’s possible for these sorts of lawsuits can backfire, but often, the time and money it takes for an average person to take on a big company aren’t worth it. People opt to simply take down their bad reviews instead.

For a country that values freedom of speech and a robust capitalist market, silencing critics (many of whom have legitimate things to say!) doesn’t seem in line with our beliefs. Not to mention, from a more practical standpoint, I’d sure like to know the potential risks or downsides of a product.

Especially when said product is supposed to replace dental work.

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Business News

Asking the wrong questions can ruin your job opportunity

(BUSINESS NEWS) An HR expert discusses the best (and worst) questions she’s experienced during candidate interviews. it’s best to learn from others mistakes.

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When talking to hiring managers outside of an interview setting, I always find myself asking about their horror stories as they’re usually good for a laugh (and a crash course in what not to do in an interview). A good friend of mine has worked in HR for the last decade and has sat in on her fair share of interviews, so naturally I asked her what some of her most notable experiences were with candidates – the good and the bad, in her own words…

“Let’s see, I think the worst questions I’ve ever had are typically related to benefits or vacation as it demonstrates that their priorities are not focused on the actual job they will be performing. I’ve had candidates ask how much vacation time they’ll receive during an initial phone screen (as their only question!). I’ve also had them ask about benefits and make comparisons to me over the phone about how our benefits compare to their current employer.

I once had a candidate ask me about the age demographics of our office, which was very uncomfortable and inappropriate! They were trying to determine if the attorneys at our law firm were older than the ones they were currently supporting. It was quite strange!

I also once had a candidate ask me about the work environment, which was fine, but they then launched into a story about how they are in a terrible environment and are planning on suing their company. While I understand that candidates may have faced challenges in their previous roles or worked for companies that had toxic working environments, it is important that you do not disparage them.

In all honesty, the worst is when they do not have any questions at all. In my opinion, it shows that they are not really invested in the position or have not put enough thought into their decision to change jobs. Moving to a new company is not a decision that should be made lightly and it’s important for me as an employer to make sure I am hiring employees who are genuinely interesting in the work they will be doing.

The best questions that I’ve been asked typically demonstrate that they’re interested in the position and have a strong understanding of the work they would be doing if they were hired. My personal favorite question that I’ve been asked is if there are any hesitations or concerns that I may have based on the information they’ve provided that they can address on the spot. To me, this demonstrates that they care about the impression that they’ve made. I’ve asked this question in interviews and been able to clarify information that I did not properly explain when answering a question. It was really important to me that I was able to correct the misinformation as it may have stopped me from moving forward in the process!

Also, questions that demonstrate their knowledge base about the role in which they’re applying for is always a good sign. I particularly like when candidates reference items that I’ve touched on and weave them into a question.

A few other good questions:
• Asking about what it takes to succeed in the position
• Asking about what areas or issues may need to be addressed when first joining the company
• Asking about challenges that may be faced if you were to be hired
• Asking the employer what they enjoy most about the company
• I am also self-centered, so I always like when candidates ask about my background and how my current company compares to previous employers that I’ve worked for. Bonus points if they’ve actually looked me up on LinkedIn and reference specifics :)”

Think about the best and worst experiences you’ve had during an interview – and talk to others about the same topic – and see how that can help you with future interviews.

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Business News

AdvoCare MLM was painted as a pyramid scheme! Well color me surprised

(BUSINESS NEWS) AdvoCare is the most recent case of an MLM being called out as a pyramid scheme by FTC, but there’s plenty more MLMs where that came from…

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AdvoCare business structure

It’s always a good day when an MLM (multi-level marketing business) actually suffers legal repercussions. Granted, these days don’t happen nearly as often as we’d like – MLM CEOs have historically had deep pockets and a far reach – which means it’s all the more reason to celebrate when one gets called out.

Today’s culprit is AdvoCare, a Texas-based “wellness” company. AdvoCare has been fined $150 million by the FTC (Federal Trade Commission) for operating a pyramid scheme. The company, as well as a few of its top influencers, have been misleading people when it comes to how much money they could earn. This is pretty typical behavior for MLMs in general, though many are careful to couch your potential earnings in vague terms.

For the record, the majority of users lost money, and most who managed to turn a profit made a maximum of just $250. I say ‘just’ because it’s hard to know how long someone would have had to work to not only break even, but manage to turn a profit. MLMs make big claims about earning money, but when you have to pour a hefty sum of cash into the products, it can take a while just to break even.

That’s why many MLMs, including AdvoCare, push contributors to recruit, rather than sell the product. And if you’re thinking that sounds like a pyramid scheme, you’re totally right. This method of putting recruiting first is part of the reason AdvoCare has gotten in trouble with the FTC.

In response, AdvoCare is moving away from multi-level marketing sales and pivoting to selling products directly to retail stores, which in turn sell to customers.

Now, with AdvoCare’s downfall, don’t be surprised if other MLMs insist that they’re different because they haven’t gotten in trouble with the FTC. In fact, plenty of MLMs are quick to tell you that they’re totally legal and totally not a pyramid scheme. Sure, Jan.

First of all, if there’s a big focus on recruiting, that’s obviously a big red flag. There are plenty of pyramid scheme MLMs out there that just haven’t gotten caught yet. But there are other sneaky ways an MLM will try to rip you off. For instance, some companies will insist you buy tons of product to keep your place, and that product can be very hard to unload. Not to mention, many of the products MLMs tout are subpar at best.

AdvoCare getting called out by the FTC is a great start, but MLMs seem kind of like hydras. Cut down one and two more seem to spring up in its place. So be vigilant, y’all. Just because an MLM hasn’t gotten caught yet doesn’t guarantee it won’t still scam you out of your hard earned cash.

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