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Illustration: Lazaro Gamio / Axios

Private equity buyouts account for 61% of the jobs lost and planned for elimination in the 2016 and 2017 retail apocalypse, according to a new study.

Quick take: Private equity snapped up retail chains like Sears and Toys 'r Us in more benign times. Amazon wasn't yet such a potent force, and buyout firms like Bain Capital and KKR — bursting with cash from institutional investors seeking high returns — saw strong profit possibilities in retail.

But when buyers massively turned to on-line shopping, many of these now-private equity-owned chains, laden with interest payments on the buyout debt, lacked free cash to pivot and compete, said Thomas Paulson of Inflection Capital Management.

  • The debt left them without "the capacity to invest, the capacity to evolve, and the stamina to withstand the headwinds," Paulson said in a report to his clients.
  • "When you lever it up and put it in a more restrictive structure, you are less able to adapt to those changes," he tells Axios in an interview.

In 2016 and 2017, some 130,000 actual and planned job cuts were announced by private equity-owned firms, Paulson said, about 61% of the total 219,000 jobs lost in retail.

This year looks likely to be troubled, too — perhaps worse:

  • From the FT's Eric Platt and Anna Nicolaou: "More than half of the largest leveraged retail buyouts completed since 2007 have either defaulted, gone bankrupt or are in distress." They added, "Observers warn that the distress is likely to accelerate in 2018 with nearly $6 billion in high-yield retail debt set to mature."
  • And this from Bloomberg's Matt Townsend, Jenny Surane, Emma Orr and Christopher Cannon: "The spillover will likely flow far and wide across the U.S. economy. There will be displaced low-income workers, shrinking local tax bases and investor losses on stocks, bonds and real estate. If today is considered a retail apocalypse, then what’s coming next could truly be scary."

Go deeper

Updated 4 hours ago - Politics & Policy

British national named in Colleyville synagogue standoff

A law enforcement vehicle sits near the Congregation Beth Israel synagogue on Jan. 16. Photo: Brandon Bell/Getty Images

British national Malik Faisal Akram took four people hostage at a Texas synagogue outside Fort Worth on Saturday, the FBI said in a statement.

State of play: Authorities had initially declined to release the name of the 44-year-old suspect or identify the hostages, all adults, though police chief Michael Miller confirmed that one of those held was Rabbi Charlie Cytron-Walker, who leads the congregation.

Updated 5 hours ago - Politics & Policy

Omicron dashboard

Illustration: Brendan Lynch/Axios

  1. Health: Concerns grow over CDC's isolation guidelines — Experts warn of more COVID-19 variants after Omicron — WHO recommends 2 new treatments — What "mild" really means when it comes to Omicron — Deaths are climbing as cases skyrocket.
  2. Vaccines: America's vaccination drive runs out of gas— Puerto Rico expands booster shot requirements— Supreme Court blocks Biden's vaccine mandate for large employers.
  3. Politics: Vivek Murthy calls SCOTUS vaccine mandate block "a setback for public health" — Focus group says Biden weak on COVID response, strong on democracy
  4. Economy: America's labor shortage is bigger than the pandemic— — CDC COVID guidance for cruise ships to be optional starting Saturday — The cost of testing.
  5. States: West Virginia governor feeling "extremely unwell" after positive test — Youngkin ends mandates for masks in schools and COVID vaccinations for state workers — America struggles to keep schools open
  6. World: Beijing reports first local Omicron case weeks before Winter Olympics — Teachers in France stage mass walkout over COVID protocols.
  7. Variant tracker
10 hours ago - Sports

Novak Djokovic loses Australian visa appeal

Novak Djokovic of Serbia plays a forehand during a practice session ahead of the 2022 Australian Open at Melbourne Park on January 14, 2022. Photo: Daniel Pockett/Getty Images

Tennis star Novak Djokovic left Australia on Sunday evening, facing a three-year visa ban after an appeals court in the country revoked his visa.

Driving the news: Djokovic will not be able to defend his Australian Open title when the tournament starts in Melbourne. The World No. 1 is looking to break a three-way tie with Roger Federer and Rafael Nadal for most Grand Slam men's singles titles.