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After more than eight decades in operation, craft retailer Joann is going out of business, closing all 800 of its stores and laying off 19,000 employees. The news comes after the retailers restructuring plans failed and a liquidator opted to purchase its assets. Joann is far from the only retailer in its death throes these days. Recent data shows that the number of retail-store closures is expected to double during 2025, to roughly 15,000 from the 7,300 or so in 2024. Accordingly, Joann is in a similar boat to companies such as Red Lobster, Big Lots, and Party City, which have each announced plans to either completely close up shop or enact big restructuring in recent months. And a commonality between many of them? Private equity firms are playing a large role. Private equity has been in the spotlight in recent years as it relates to many large-scale business restructurings and closings. For instance, restaurant chains Red Lobster and TGI Fridaysboth of which filed for bankruptcy last yearwere backed by private equity firms. Critics say that private equity, often simply referred to as PE, tends to come in and strip a company for parts and eventually kill it off rather than trying to make an honest attempt at turning the business around and making it profitable. While poor stewardship on the part of private equity can certainly contribute to a company’s downfall, experts say what happened with Joann appears to be more nuanced. “Private equity doesnt have a crystal ball” Joanns situation is somewhat unusual as it relates to its current situation. Back when it was known as Jo-Ann Stores, the company was acquired by PE firm Leonard Green & Partners in 2011 for roughly $1.6 billion as part of a leveraged buyout, taking the company private. The deal effectively put Joann and its resources up as collateral, and after some rebranding and leadership changes, the retailer went public again in early 2021, during a stretch when it was getting a jolt from pandemic-era growth in crafting and other such at-home activities. But the past few years havent been so kind, and Joann again faltered. It found itself in the lurch with two bankruptcies over the past year as its leadership was unable to successfully capture the brief momentum it had experienced in 2020 and 2021. It’s hard to ignore that Joann is a specialty retail company with a huge geographic footprint, large-format stores, and thousands of employees: exactly the kind of retailer that has found it increasingly difficult to thrive in the decades since e-commerce companies like Amazon have entered the fray. So while Joann did have PE backing, prevailing market conditions may be the firms ultimate undoing, experts point out. People forget the incredible role that market conditions play, says Donna Hitscherich, a senior lecturer in discipline, finance, and economics and director of the Private Equity Program at Columbia Business School. She says PE firms know how to operate businesses and are “singularly focused” on turning a profit. “Theres little or no incentive for PE to come in and have a business fail, as in the case of Joann,” Hitscherich says. “That wasnt their plan. Private equity doesnt have a crystal ball. Though Joann did receive a shot in the arm during the pandemic, when many people took up new hobbies and crowded into craft stores, the retailer has been trending downward for a while. If a private equity firm purchases a struggling retailer only to see that retailer go under, theyre just giving away money, Hitscherich says. Mixed incentives There are ways that PE firms do make money even if the company it purchased is circling the drain, however. Because of the laws and regulations that surround the PE industry, firms are often incentivized to extract money rather than to try and make a company succeed or survive, says Brendan Ballou, author of the book Plunder: Private Equitys Plan to Pillage America, and former special counsel with the U.S. Department of Justices antitrust division. The issue is that PE firms also take fees from businesses, like management fees or transaction fees, he says. In effect, PE firms may develop a sort of parasitic relationship with their portfolio companies, extracting money through fees even if its to the long-term detriment of the targets they acquire. This sometimes happens as part of a leveraged buyout, which may put target companies at a disadvantage, as they effectively receive a lifeline but go further into debt in order to secure it. Add in the fees on top of that, and companies that were already struggling to make money may find those struggles compounded. The investors in the PE firm certainly want the business to succeed, but thats not necessarily the case for the firm, Ballou says. As such, there are mixed incentives at play. While some PE firms may end up speeding up the death of a portfolio company, rather than helping to resurrect it, supporters of private equity maintain that it plays an important role in the economy. A report from EY, provided to Fast Company by the American Investment Council, a PE-focused advocacy organization, found that the PE sector directly employed 12 million people during 2022, and a vast majority (85%) of the companies that PE firms back are small businesses with fewer than 500 employees. So, while there is a role for private equity, there are also legitimate questions to be asked when a beloved company like Joann or Red Lobster hits the skids. For Ballou, it all comes back to the issue of crossed incentives: Failure for Joann doesnt necessarily mean failure for a PE firm.
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E-Commerce
Serena Williams is joining the ownership group of the WNBAs first Canadian franchise, the Toronto Tempo, the team announced Monday. She will partner with Larry Tanenbaum, Chairman of Kilmer Sports Ventures for the Tempo, who will begin play in the 2026 season. I am thrilled to announce my ownership role in the first Canadian WNBA team, the Toronto Tempo, said Williams. This moment is not just about basketball; it is about showcasing the true value and potential of female athletes I have always said that womens sports are an incredible investment opportunity. I am excited to partner with Larry and all of Canada in creating this new WNBA franchise and legacy. Williams, one of the greatest tennis players in history, will play an active role in future jersey designs. She made her professional tennis debut at age 14 at a tournament in Canada in 1995, and her last event was the 2022 U.S. Open. Williams won 23 Grand Slam singles titles the most by a woman in the sports Open era plus another 14 major trophies in womens doubles alongside her older sister, Venus. Serena is a champion, said Tempo President Teresa Resch. Shes the greatest athlete of all time, and her impact on this team and this country is going to be incredible. Shes set the bar for women in sport, business and the world and her commitment to using that success to create opportunities for other women is inspiring were thrilled to be marking the lead-up to International Womens Day with this announcement. Williams is the latest former pro athlete to join a WNBA ownership group. Magic Johnson, Tom Brady, Dwyane Wade and Renee Montgomery already are owners. This isn’t the first ownership venture for Williams. She has a stake in the Angel City FC women’s soccer team. She also holds minority stakes in the Miami Dolphins as well as TGLs Los Angeles Golf Club, the virtual golf league headed by PGA stars Tiger Williams and Rory McIlroy. Williams’ husband, Alexis Ohanian, donated millions of dollars to Virginia’s women’s basketball program last year. He graduated from the school. Doug Feinberg, AP basketball writer
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E-Commerce
A group representing U.S. airlines plans to urge federal aviation officials to permanently reduce helicopter traffic around Reagan National Airport outside Washington, D.C., following a January collision by an Army Black Hawk into an American Airlines regional jet that killed 67 people. Airlines for America, in written testimony prepared for a U.S. House of Representatives hearing on Tuesday, calls on the Federal Aviation Administration to permanently suspend some helicopter routes near the airport with limited exceptions for essential military or medical emergencies. The testimony, seen by Reuters, also calls for military aircraft to be required to use a key safety system known as ADS-B near large airports in which aircraft determine and broadcast their position using satellite navigation to avoid collisions. Airlines for America represents American, Delta Air Lines, United Airlines, Southwest Airlines and other airlines. The FAA has temporarily barred most helicopters near the airport – located in Arlington, Virginia, across the Potomac River from the U.S. capital – since the crash pending a preliminary report due out this month from the National Transportation Safety Board. The Black Hawk, carrying a crew of three, collided with the airliner, carrying 64 passengers and crew members, on the night of January 29, with the wreckage plunging into the river. There were no survivors. U.S. Senator Ted Cruz said the Army helicopter was operating with its ADS-B turned off, which is permitted by the FAA for military aircraft. Airlines for America wants the FAA to evaluate whether any helicopter routes that could conflict with airplane flights at Reagan could be moved farther away from commercial traffic. The group also urged an immediate FAA review of air traffic near large airports. “The FAA should conduct an immediate review of identified potential hot spots of conflicting air traffic operating near large airports,” the group said in the testimony, adding that the agency should be able to “to suspend or eliminate traffic routes if unnecessary risk exists.” The FAA declined to comment on the testimony but noted that it is conducting a review of helicopter routes near other airports. The FAA is due to review the existing restrictions once the NTSB preliminary report is issued. The FAA is allowing only presidential transport and emergency police or medical helicopters near the airport and banning civilian flights whenever President Donald Trump’s helicopter is flying nearby. These restrictions have significantly impacted flights. Transportation Secretary Sean Duffy in a February 5 speech in Washington called for ending non-essential military helicopter flights near the airport. “If we have generals who are flying in helicopters for convenience through this airspace, that’s not acceptable. Get a damn Suburban (vehicle) and drive – you don’t need to take a helicopter,” Duffy said. David Shepardson, Reuters
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E-Commerce
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