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Dive Brief:
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Facing a “liquidity crisis,” Bob’s Stores and Eastern Mountain Sports, which are owned by GoDigital Media Group, this week jointly filed for Chapter 11 bankruptcy. The chains run about 50 stores and employ about 771 people, per court filings.
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CEO Dave Barton told the U.S. Bankruptcy Court for the District of Delaware that the company needs funds immediately in order to make payroll on Friday. PNC Bank, which says it’s owed nearly $30 million, has put the company in default, plus the retailers owe another $27 million in unpaid rent and other operating debts, Barton also said.
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U.K. company Sports Direct, now known as Frasers Group, bought the chains in 2017 out of a previous bankruptcy, then sold them to GoDigital in 2022.
Dive Insight:
Outdoor gear purveyor Eastern Mountain Sports and Bob’s, which sells athletic gear and casual apparel, are faltering at a tough time for those categories. Sporting goods sales have declined each month this year, according to the U.S. Department of Commerce.
Meanwhile, competition is fierce. Dick’s Sporting Goods in particular has been taking share from rivals, expanding its experiential House of Sport concept and wooing outdoor enthusiasts via its Public Lands and Moosejaw banners, though even it isn’t immune to pressures in the outdoor sector.
Last year EMS and Bob’s generated $131.9 million in net revenue, per court filings. A crisis brewing earlier this year made the Chapter 11 filing necessary, Barton said. On March 29, PNC declared a default under their loan agreement, took control over the chains’ cash and receivables, and would only fund certain expenses. The retailers and the bank couldn’t resolve their issues, and on June 12 PNC stopped funding their operations, per the filing.
Some $935,000 in wage obligations have accrued and remain unpaid, along with other outstanding debts, Barton said. In addition to the immediate need to pay employees on Friday, the company doesn’t “have sufficient unencumbered cash and need liquidity to operate their businesses and pay operating expenses critical to the businesses, including utilities, payroll, rents, insurance, and taxes,” so has sought to have a cash collateral motion heard on an emergency basis.
To save money, the chains are in the process of vacating a distribution center, deciding to operate from their larger stores instead, per court documents. At press time, the Bob’s website was “under construction,” while the EMS site was operational, advertising “everything on sale.”
via https://www.aiupnow.com
Daphne Howland, Khareem Sudlow
