Why private equity keeps wrecking retail chains like fairway

The list of retailers that have been bought and wrecked by private equity firms keeps on growing. This week, the beloved New York grocery chain Fairway filed for its second bankruptcy in less than four years and announced plans to sell off its stores, thanks to a disastrous run of mismanagement by a series of buyout shops. It’s on a list of casualties that now includes Toys R Us, Payless ShoeSource, and Sports Authority, among many others. That’s on top of financially troubled names like Neiman Marcus that have managed to avoid Chapter 11 or liquidation (so far). Last year, a group of progressive nonprofits reported that of the 14 largest retail bankruptcies since 2012, 10 had involved companies owned by private equity. The thud of corporate failures has become so constant that it’s essentially become a meme in the financial press. “Have we finally reached the point where we automatically assume that every new retail disaster has been caused by a private equity firm?” Bloomberg’s Joe Nocera wrote after the Fairway news broke. “Yes, I believe we have.” Read more at Slate.

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