Earlier this week, news that Big Rock Sports had shuttered kicked off a not-so-cheerful February for the outdoor business.
Fair warning: if you’re looking for something uplifting to give your retail confidence a boost, don’t read any further.
Seems it’s only a matter of time before Eddie Bauer files a third Chapter 11 bankruptcy with retail news outlets Women’s Wear Daily (subscription required) reporting those bankruptcy plans include the closure of the nearly 200 Eddie Bauer retail locations across North America.
Eddie Bauer’s first bankruptcy happened in 2003 when parent company at that time, Spiegel Inc. filed bankruptcy. After a restructuring, Eddie Bauer emerged in June 2005 as a stand-alone company called Eddie Bauer Holdings, Inc.
In June 2009, Eddie Bauer Holdings filed for Chapter 11 bankruptcy, citing heavy debt, slumping sales and recession pressures. It secured financing during that bankruptcy while looking for a buyer.
In July 2009, private equity firm Golden Gate Capital purchased the business for $286 million. In 2021, Golden Gate sold Bauer to a partnership with Authentic Brands Group (ABG) and SPARC Group. ABG owns the intellectual property; SPARC manages retail operations and store locations.
Now, the company is preparing to add a third Chapter 11 filing to the growing list of retail failures. Retail analysts don’t just attribute the issues to the burgeoning popularity of online shopping, saying the stores were too-crowded, unappealing and didn’t keep the Eddie Bauer brand relevant.
The chain will exit the United States, but it appears current ownership intends to keep stores in Japan operating. WWD reports the manufacturing, e—commerce and wholesale operations will remain in North America but will transition to another licensee. Meanwhile, The Street is reporting the liquidation of inventory is presenting shoppers with opportunities to score Bauer gear at deep discounts.
According to industry experts, this is another example of repeated failure of the conglomerated brands business model. Actually, they call it the “logical endpoint of the conglomerate business model: financial arbitrage masquerading as brand stewardship.” Eddie Bauer’s e-commerce operation will move to another licensee. In effect allowing current owners to monetize the exit while simultaneously ditching unprofitable physical operations.
That’s not the only ugly retail news we’re hearing, just the latest with confirmation.
Right now I’m working on reports that one major firearms manufacturer, tired of frequent violations of MAP (minimum advertised pricing) has notified a major online retailer that they will be permanently banned from future transactions.
It’s not unusual for companies to put temporary blocks on companies for MAP violations, but it seems this company has essentially thumbed its nose at the manufacturer one time too-often.
In return they’re on the “companies we do not want to do business with” list- and not just for some short timeout. Both are “names” in the industry.
As always, we’ll keep you posted.
—Jim Shepherd