In a surprise move, global retail-leader Claus Corp announced it has decided to forego opening a second distribution location, postponed its initial public offering, and will be pivoting its business model starting in 2020.
"The decisions were made based on a number of mounting factors," a spokes-elf for the company said in a statement released on Christmas Day. "Claus Corp is simply responding to changing consumer sentiment and the rise of new global market forces."
Claus Corp, headquartered at the North Pole in the Arctic Circle, has been a steadfast and leading product design company for centuries. Founded by its popular and well-respected CEO Kris Kringle, the company is best known for delivering toys and goodies to families around the world. Claus Corp is the global shipping leader on Christmas Day and in 2019 was recognized again as one of the "Top Places to Work" by Elf Insider.
Santa Clause is Not Coming to Town
In the company statement, Claus Corp said that it "will discontinue its search for a second headquarters," which originally was speculated to bring thousands of jobs for seasonal elves. "We have watched the decision of Jeff Bezos carefully this year, and we feel it is best to take a step back and analyze how Amazon's decision plays out."
The company was referring to the abrupt decision by online retail-giant Amazon to cancel its plans for a Long Island Corporate Campus this year.
For more reference, Amazon announced in 2017 that it was considering the launch of a second headquarters and issued a request for proposals from U.S. cities that could accommodate the expansion. According to Amazon, the new headquarters (HQ2) would potentially bring 50,000 new jobs and $5 billion in capital investments. By October of that year, Amazon had received 238 proposals.
In November 2018, Amazon announced that it had decided to split the HQ2 between New York (Long Island) and Washington, DC. The announcement was immediately met with criticism, as it was made public that Amazon had received billions of dollars in incentives in return, including $3 billion from New York alone.
As more information surfaced, community leaders from New York state senator Michael Gianaris to the then newly-elected Congresswoman Alexandria Ocasio-Cortez started mobilizing support to block the decision. In February 2019, Amazon changed its mind.
"A number of state and local politicians have made it clear that they oppose our presence and will not work with us to build the type of relationships that are required to go forward," a statement by Amazon read.
Even though there was strong support for the move to New York, the decision by Amazon to change course put an exclamation point on the growing influence of ground-roots activism and consumer pressure. It is easy to see why Claus Corp would take a more conservative and cautious approach to such a decision.
In addition to reconsidering its expansion, Claus Corp also indicated that it would not seek the much-anticipated initial public offering (IPO) it had planned in 2020. The offering, originally to list on the NYSE with the ticker "SNTA," was projected to raise millions of dollars to help rebuild Claus Corp's aged infrastructure and bring its distribution capabilities in line with the latest technologies.
"After the disappointing results of 2019 IPOs," the company statement said, "Claus Corp has decided to postpone its offering until such time that market conditions are more in line with our goals." Based on the lineup of the past year, it is easy to see why the company decided to wait.
Ridesharing is Not Caring. The disappointing year was led by highly anticipated IPOs from the two prominent U.S. ridesharing companies, Lyft and Uber. Lyft, which became the first ridesharing company to list in March, actually did well out of the gate, rising over 8 percent above its IPO share price. Unfortunately, the stock price has since sunk, causing its market cap to fall from $20.5 billion at IPO time to around $13.5 billion as it closes out the year.
Next up was Uber. The company's IPO was one of the most anticipated of the year and early estimates put its valuation as high as $120 billion. As controversies bubbled up around then CEO, Travis Kalanick, enthusiasm waned, and the stock ended up trading well below its IPO target. After the dust settled, the company was valued at $82 billion, but as insiders began selling shares after the lockup period, the stock fell further. Currently, Uber is valued at less than $52 billion.
No holiday smiles. SmileDirectClub, a budding and exciting "teledentistry" company, went public in September, after a few years of exciting growth that landed their co-founders on Inc.'s 2017 30 Under 30 list. The company also announced a partnership with CVS in April to open thousands of in-store locations over the next two years. But the company has not been profitable and has been plagued by a class action lawsuit, and while the original valuation for the company floated around $8.85 billion, the stock fell precipitously after trading began, making it the one of the worst IPO debuts in two decades. The company's market cap currently hovers just below $3.2 billion.
We don't work. Of course, one of the biggest stories of 2019 was the IPO that wasn't, WeWork, the commercial real estate company that provides shared workspaces and services to companies. In January, WeWork was valued at $47 billion after a financing round by SoftBank, one of its leading investors, and by the summer, the company announced its intention go public. Over the next several months, however, immense losses and the reveal of several questionable business decisions by its co-founder and then CEO Adam Neumann created a great deal of apprehension around the business, and in October the company received an emergency $9.5 billion to keep it from going insolvent. The company postponed its IPO indefinitely, but currently the company is valued at less than $8 billion.
While Claus Corp has postponed its IPO, an unnamed source within Claus Corp reported that the company has registered in Bermuda, where it has assembled a team of legal experts to consider listing as a digital asset. "The blockchain is the future," the source stated on the record, "and if I know anything about Mr. Kringle, it is that he has one boot in the waters testing its viability for the coming year."
Deck the Malls with Stores-a-Closing
Claus Corp also announced it was reconsidering its centuries-old business model. "After the closing of several retail establishments in 2019," the Claus Corp statement continued, "we see the need to reassess the deployment of our assets so that they continue to return the highest value to our stakeholders. We therefore will be reconsidering the long-term viability and sustainability of our direct-to-consumer business model."
- AC Moore. The arts and crafts retailer said in November that all 145 stores in the U.S. will close.
- Barneys New York. The decades-old clothing and accessory company filed for bankruptcy protection in August 2019, and only the Madison Avenue store in Manhattan remains open.
- Bed, Bath and Beyond. The home accessory company had reported it would close 40 stores in 2019, but instead shut down 60 after a disappointing first half of the year.
- Charlotte Russe. The teen apparel retailer filed bankruptcy in February 2019 and has so far closed more than 500 stores nationwide.
- GNC. The health and wellness chain will close roughly 900 stores by the end of 2020.
- Dressbarn. The clothing store will close all 650 stores by the end of 2019.
- Forever 21. The popular apparel retailer filed for bankruptcy in September 2019 and will close more than 800 stores worldwide.
- Gymboree. The kids clothing company filed for bankruptcy in January 2019 and said it would close all 800 of its Gymboree and Crazy 8 stores.
- JC Penny. The department store chain will close 18 stores and nine home and furniture shops in 2019, but has hinted that more closures are coming in 2020.
- Payless Shoes. The well-known shoe store filed bankruptcy (again) in February and closed all 2,500 North American stores.
- Pier 1 Imports. In September, the home furnishings company reported it will close 70 of its 950 retail store locations in 2019.
- Sears and Kmart. Prior to 2018, there were 700 combined department stores. By the end of 2019, there will be 182.
- Victoria's Secret. The retail lingerie company has been closing an average of 15 stores per year. In 2019, it will close 53 locations.
There was a lone retail bright spot. Toys R Us, which in 2018 closed all of its 735 stores, showed signs of a resurgence, opening two new stores for the 2019 holiday season. According to a Claus Corp executive, "Our company was built on the experience of the season, especially to our young and loyal fans, so we will be watching this transition from retail products to consumer experiences with great attention and enthusiasm."
When reached for comment from the Claus Corp CEO himself, a simple, prepared remark was provided: "Merry Christmas to all, and to all a good night."