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Why Major Retailers Like Foot Locker, Macy's Aren't Qualifying For Government Aid

Why Major Retailers Like Foot Locker, Macy's Aren't Qualifying For Government Aid

The list of national, well-known major retail brands that don't qualify for government assistance includes Abercrombie & Fitch Co. (NYSE: ANF), Bed Bath & Beyond Inc. (NASDAQ: BBBY), Foot Locker, Inc. (NYSE: FL), L Brands Inc (NYSE: LB) and Macy's Inc (NYSE: M), among others, CNBC's Courtney Reagan said Thursday on "Fast Money."

Retailers Could Be 'Pushed To Insolvency' 

Multiple retailers are being left out of the Fed's credit facilities or the Treasury's CARES act because their debt wasn't investment-grade rated as of March 22, Reagan said.

The National Retail Federation is in discussions with the White House and Treasury to promote a "liquidity for all" solution, she said. 

The main argument for supporting all retailers is that some were able to operate as normal prior to the pandemic, Reagan said. Now, through no fault of their own, they could be "pushed to insolvency" because of the virus, she said. 

So far, the White House is "open" to the NRF's perspectives, according to CNBC. 

Why It's Important For Retailers 

Under a "liquidity for all" plan, companies that were on the verge of bankruptcy prior to the coronavirus, such as Macy's, could have access to new liquidity.

This could be viewed as a "controversial" move by the government, Reagan said. 

On the other hand, Macy's still has more than 100,000 workers, hundreds of locations and rental agreements, which implies that a potential bankruptcy would have a notable negative impact for many, she said. 

"Picking out winners ... or losers ... or just giving liquidity to all — this is a tough one."

What's Next For Retail 

Potential other solutions to help save companies and jobs include M&A deals, involvement from private equity and other private capital, Reagan said.

Of particular interest would be strong brands with attractive intellectual properties that are otherwise now trapped inside "a broken company," she said. 

Related Links:

Macy's CFO Departure Adds Further 'Uncertainty'

How The Economic Shutdown Will Affect Retail Stocks

Photo by Ingfbruno via Wikimedia


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