Eastern Outfitters, the parent company of Eastern Mountain Sports and Bob’s Stores, has filed for Chapter 11 protection in Delaware.
UK-based sporting goods chain Sports Direct has reached an agreement with the firm to become a stalking horse bidder at an upcoming bankruptcy auction.
Eastern Mountain and Bob’s Stores merged in June 2016 under the Eastern Outfitters holding company when owner Vestis Retail Group filed for Chapter 11 bankruptcy in April. Upon filing bankruptcy, Vestis shuttered all 47 Sport Chalet locations and its e-Commerce site.
The sporting goods industry has taken a beating over the past year, with former sector leader Sports Authority closing all its stores and selling its intellectual property to the new leader DICK’S Sporting Goods. Competition with Amazon and Walmart has prevented e-Commerce sales from thriving at brands such as Sports Chalet, Sports Authority and the Eastern Outfitters duo, and it appears that situation will continue to have an impact on how these retailers operate.
Sporting goods retailers have also suffered from the deep discounting that prevailed throughout much of the retail industry during holiday 2016, according to a blog post on NPD.com by Matt Powell, VP and Industry Analyst of the Sporting Goods Sector at NPD Group.
Powell indicated that sporting goods retailers should expect more store closures in 2017 if they continue to double down on “poor imitations of activewear” and trot out more apparel and accessories with logos on them despite consumers’ disinterest.
“Unrequited demand is another fundamental strategy in the sports business,” Powell said in the blog. “If demand is not met, there is no need to promote. Innovation has always been a cornerstone of the sports industry. Even in the distressed sweatshirt category, innovative and more technical products sold well this holiday and posted big increases. We must find ways to keep innovation strong. This will help fend off the athleisure bubble as well.”
Powell continued: “The sports industry has always been about premium and exclusive products. We must emphasize the premium nature of our business and avoid trying to grow by the lowest prices.”
A wide range of brands beyond the sporting goods vertical have had to resort to bankruptcy recently, with casualties including The Limited, Wet Seal, American Apparel, Aéropostale and Pacific Sunwear. High real estate costs are obviously becoming a burden on these brands as fewer people travel to these stores. In the case of Eastern Outfitters, one can reasonably expect store closures going ahead.