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IMG_7130 (2)Deb Shops and Delia’s announced plans to liquidate last week and many other specialty retailers appear on the verge of bankruptcy.  While the economy, new competitors, and the disruptive impact of e-commerce are partially to blame, other avoidable mistakes are also at play.  Leadership problems, merchandising issues, and operational missteps are common.  Flawed store opening strategies compound these issues.  Long term leases are equivalent to debt and when sales and gross margins fall, hidden leverage (rent) can create liquidity problems.

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