Lease-loving retailers would see debt soar under new rule

New York /
Sep.September 30, 2013 04:06 PM

New York City retailers would be required to include the amount of financing they use to lease real estate on their balance sheets, rather than in the footnotes of their financial statements, under a new rule from a private group that sets widely accepted accounting standards.

Under the proposed accounting method, advanced by the Financial Accounting Standards Board, companies could see a spike in their total reported debt.

After the U.S. Securities and Exchange Commission expressed concerns over off-balance-sheet transactions, the FASB and the International Accounting Standards Board worked on this new rule, which they are likely to finalize next year.

New York leasing heavyweights that would see an increase in reported liabilities include Aéropostale (225 percent), Foot Locker (222 percent), Ann Taylor (193 percent), Tiffany & Company (57 percent) and Barnes & Noble (51 percent).

Georgia Tech accounting professor Charles Mulford told Crain’s that the change will have “material effects” on profitability, financial leverage, cash flow and other measures that are important to investors. The true impact, however, will not be apparent to investors for at least three years. [Crain’s]Mark Maurer


Related Articles

arrow_forward_ios
(iStock)
Job recovery sputters, but hospitality & leisure add hiring
Job recovery sputters, but hospitality & leisure add hiring
Jeff Sutton and 25 West 34th St. (Wharton Properties, Google Maps)
Jeff Sutton will replace Midtown retail space with hotel
Jeff Sutton will replace Midtown retail space with hotel
New York’s medical marijuana industry is expecting a boom in business. (Getty)
Medical marijuana company bags Long Island grow site
Medical marijuana company bags Long Island grow site
Hong Kong rent has toppled over in the past year. (Getty)
Rents declined on most Asia-Pacific retail strips last year
Rents declined on most Asia-Pacific retail strips last year
Gov. Andrew Cuomo (Getty)
Cuomo ups NYC indoor dining capacity to 75%
Cuomo ups NYC indoor dining capacity to 75%
Gov. Andrew Cuomo (Getty, iStock)
NY to end bar, restaurant curfew in May
NY to end bar, restaurant curfew in May
After closing hundreds of stores, Starbucks is growing again. (Getty)
Higher profits brewing for prolific retail tenant Starbucks
Higher profits brewing for prolific retail tenant Starbucks
(iStock)
Domestic shopping is approaching pre-pandemic levels in NYC
Domestic shopping is approaching pre-pandemic levels in NYC
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...