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Private equity has killed 600,000 retail jobs, study says

Toys R Us
A woman pushes a shopping cart over a floor decal at a Toys R Us store. Toys R Us, buckling under competition from Amazon and several billions of dollars of debt from a leveraged buyout, filed for Chapter 11 reorganization in September 2017.
(Daniel Hulshizer / Associated Press)

Amazon.com Inc., landlords who charge sky-high rents, brands that fail to adapt. The carnage in the retail industry has been blamed on all of them. Now Wall Street is being blamed too.

Over the last decade, 597,000 U.S. employees working for retailers owned by private equity firms and hedge funds have lost their jobs, while the sector as a whole added more than 1 million positions, according to a report by the Center for Popular Democracy and the Private Equity Stakeholder Project. The workers advocacy groups estimate that an additional 728,000 “indirect jobs” have disappeared at suppliers and local businesses, bringing the total casualties to about 1.3 million jobs.

“It is unsurprising that 10 out of the 14 largest retail chain bankruptcies since 2012 were at private equity-acquired chains,” the study, titled “Pirate Equity,” said. “Wall Street firms are poised to impact an additional 1 million people working in retail in the coming years.”

“This report is biased and is focused on a sector that experienced tremendous disruption over the past decade,” Drew Maloney, president of the American Investment Council, a private equity trade group, said in an emailed statement. “Private equity has a clear record of supporting millions of jobs across all sectors and investing in communities across America.”

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This month, Sen. Elizabeth Warren (D-Mass.) unveiled a policy proposal to impose new rules on private equity firms, which she said often act like vampires when they buy a business by “bleeding the company dry.”

The Democratic presidential candidate’s comments came about a year after fired Toys R Us Inc. workers urged Congress to press for changes in the way private equity deals are structured. The chain filed for Chapter 11 reorganization in September 2017 after buckling under competition from Amazon and several billions of dollars of debt from a 2005 leveraged buyout. A year after it shut down, Toys R Us is set to return this holiday season about half a dozen U.S. stores and an e-commerce site, according to executives of a new entity, Tru Kids Inc.

Many would argue that closing stores across the U.S. is warranted because the country is “over-retailed” and many chains have been unable to keep up with the industry’s shift to online shopping.


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