2/22/17

The Right To Zombify The Limited Sells For $26.8M

The Limited closed its retail stores and its online presence earlier this year, but don’t worry: A well-known brand never stays dead for long. Sycamore Partners, a private equity firm that owns other familiar, once-troubled retail brands like Belk, Coldwater Creek, Hot Topic, Jones New York, Talbots, and Torrid, purchased the brand’s intellectual property and online presence.

Reuters reports that Sycamore was the stalking horse bidder that expressed interest before the auction, and no higher bids were submitted.

This is a busy time for anyone interested in buying defunct apparel brands: Wet Seal, another bankrupt clothing retailer, plans to have its own auction sometime next month.

While the Limited stores been spun off into a separate company, it was the original ancestor of familiar mall brands that are still around today. L Brands, formerly known as Limited Brands, acquired and developed chains like Victoria’s Secret and Bath and Body Works, and turned Abercrombie & Fitch from a dusty outdoors outfitter brand into a hot teen clothing chain.

Does this mean Limited stores could return to malls? Maybe, but first you can expect to see the retailer’s website come back.

18 Attorneys General Ask Education Secretary DeVos To Not Go Soft On For-Profit Colleges

A number of high-profile for-profit educators shut down or scaled back operations in recent years, among accusations of overcharging and under-educating students, and new rules intended to hold schools accountable. However, these companies’ fortunes began to turn after the election of Donald Trump and his naming of pro-industry Education Secretary Betsy DeVos. That’s why a group of 18 state attorneys general are calling on the administration to not ease up on these controversial schools.

Shortly after the election, Rep. Virginia Foxx (NC) — the new Chair of the House Education Committee (and the largest recipient of campaign contributions from both the for-profit college and student loan industries) — said that Congress would “do everything we can to roll back those rules and regulations” put in place by the previous White House.

It’s pro-business, anti-regulation sentiments like this that led the 18 attorneys general to send a letter [PDF] to DeVos and Congressional leaders, raising concerns that without current protections, for-profit colleges would see it as “open season” on students.

“As the chief consumer law enforcement agencies in our states, our offices handle thousands of complaints concerning higher education every year,” the AGs wrote in the letter, adding that their offices have worked to stop abuses by schools such as ITT Technical Institute, Corinthian Colleges, and DeVry University.

For example, just last month, New York Attorney General Eric Schneiderman’s office announced a $2.75 million settlement with DeVry University related to the company’s use of deceptive ads to recruit students.

In April 2016, Massachusetts Attorney General Maura Healey filed a lawsuit against ITT Educational Services, accusing ITT Technical Institutes of using unfair and harassing sales tactics, and misleading students about the quality of its Computer Network Systems programs, and the success of the program’s graduates in finding jobs.

The AG’s note in the letter that through their investigations and lawsuits, the Dept. of Education began to take steps to prevent these abuses by issuing new regulations and policies.

“Three of these recent steps — the Gainful Employment Rule, the policy of vigorous federal oversight of accreditors, and the Borrower Defense to Repayment Rule – are essential to protect both consumers and taxpayers from fraudulent actors in the for-profit education sector,” the letter states.

Under the Gainful Employment rules, which went into effect in June 2015, for-profit colleges are at risk of losing their federal aid should a typical graduate’s annual loan repayments exceed 20% of their discretionary income, or 8% of their total earnings.

Likewise, the Borrower Defense Rule allows student’s federal education loans to be forgiven if they can prove their college used deceptive practices to convince them to enroll.

“Our extensive experience in the higher education field, and our participation in the process of developing these recent policies and regulations, gives us unique insight into the abusive and deceptive practices of for-profit schools over the last ten years,” the letter states. “We cannot overemphasize the harm to students and taxpayers that a rollback of federal protections would cause.”

“Allowing for-profit schools unfettered access to federal student loan money without reasonable oversight and accountability is a mistake that American students and taxpayers should not be made to pay for again,” the AG’s warn.

The letter was signed by AG’s from Illinois, Connecticut, Delaware, Hawaii, Iowa, Kentucky, Maryland, Massachusetts, Minnesota, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Washington, and the District of Columbia, as well as the Office of Consumer Protection of Hawaii.

Buying Up Dying Malls Can Be A Viable Business

We hear so often about the fading of brick-and-mortar retail that it might seem hard to believe that there are companies out there in the market to buy more malls. Yet there are buyers for distressed malls, even when the owners are about to walk away. Yet there are companies that specialize in this kind of thing, and they aren’t tearing them all down or turning them into apartments.

Bloomberg News recently checked out Hull Property Group, a company out of Georgia that began taking over and restoring failing malls even before the Great Recession. What are the steps it takes to bring a shopping center back to life?

Choose carefully. People still like to gather at malls and shop for some things in person, but don’t buy in areas already have newer and spiffier malls. The best candidates for revival aren’t too remote, but also don’t have a good enclosed mall for another 50 to 100 miles around.

Don’t pay a lot. Hull recently bought a mall in Kingston, NY, that was last appraised at $87 million for $9.4 million. Paying very little to buy a mall means having some extra money to throw around to spruce it up, and being able to charge low rents.

Kick anyone who makes you look bad out. At the same time, identify “downmarket” retailers that might be keeping other stores away, and don’t renew their leases. This depends on what kind of business the mall is interested in: Maybe the new owners’ goal is to keep as many stores leased as possible, and that’s cool too.

Build community. Malls are the default gathering spaces in many suburbs and exurbs, and doing things like improving movie theaters and bringing in some tenants that aren’t retail can help build up that idea. Party spaces, medical offices, churches, and colleges are all tenants that malls can bring in strategically, not just out of desperation.

“We want to be in markets where the mall is still one of the more interesting things to do on the weekend,” the director of retail at another real estate firm buying up cheap malls told Bloomberg. Is that sad, or hopefuil?

Adidas Accuses Puma Of Swiping Its Stripes For New Soccer Cleats

Perhaps more than any other piece of apparel, sneaker brands are often closely associated with their well-known logos. Nike’s got the swoosh, Adidas has its three stripes, and Puma has, well… a puma. However, Adidas now claims that Puma’s latest soccer cleats cross the trademark infringement line by allegedly copying the Adidas stripes.

The lawsuit [PDF], filed in the U.S. District Court District of Oregon, claims that Puma’s soccer cleats adorned with four stripes constitute trademark infringement, unfair competition, trademark dilution,and deceptive trade practices.

According to the complaint, for over 60 years Adidas has sold soccer and other apparel products bearing the distinctive “three-stripe” design that is covered by numerous trademark restrictions.

The company says it has become particularly well known among soccer athletes, fans, and consumers thanks in part to its long with the longstanding sponsorship of the FIFA World Cup, Major League Soccer, and other soccer-related competitions — even if it does misspell “Colombia.”

Adidas Soccer Cleats

Despite this, Puma recently began selling a “soccer cleat bearing a confusingly similar imitation of Adidas’s three-stripe mark.”

Adidas contends that Puma’s cleats are “likely to cause consumer confusion and deceive the public regarding of the source, sponsorship, and/or affiliation of that footwear.”

Puma's recently released cleats.

To make matters worse, Adidas notes that not only is Puma a direct competitor, but the two companies share a common background: The companies were founded by brothers and continue to be headquartered in the same German town.

Through the relationship, the suit claims, Puma is “intimately familiar” with Adidas’s three-stripe mark.

“Puma’s use of four diagonal stripes on the side of the Infringing Cleat is a blatant attempt by Puma to trade on the goodwill and commercial magnetism Adidas has built up in the Three-Stripe Mark and to free-ride on adidas’s fame as a preeminent soccer brand,” the lawsuit notes.

With the lawsuit, Adidas seeks to stop Puma from selling the four-striped cleats and an order requiring the company to pay damages and forfeit all of its profits from the sale of the alleged trademark infringing footwear.

This isn’t the first time Adidas has sued a competitor over allegedly similar designs. In Sept. 2015, the company sued Sketchers, claiming the company’s “Onix” sneaker was a rip off of the “Stan Smith” shoe.

Adidas’s Stan Smith design is based on a 1963 shoe worn by tennis star Stan Smith, and features green markings on a white sneaker, with perforations in its signature three lines. The Onix shoe by Skechers is also a white shoe with green markings and perforations, though the holes are punched in a different pattern of five lines.