Eastern Outfitters LLC on Thursday won a court order for an expedited hearing to close 48 Bob's Stores and Eastern Mountain Sports locations. The company will seek a Deleware bankruptcy court's approval of the plan on April 13, Reuters reports.
The company had been working on a deal with U.K. sports retailer Sports Direct International PLC to decide which of its locations should shutter, according to bankruptcy court documents obtained by The Wall Street Journal.
Eastern Outfitters runs 86 Bob’s and EMS stores with the help of 2,600 full-time, part-time and temporary employees. The court papers don’t disclose which stores are slated to close, but state that parties involved “have been working on analyzing the performance, sales and profitability of all of the Debtors’ retail locations. Sports direct has identified certain locations that do not make economic sense to operate, particularly if the debtors are unable to get better terms on some of their leases,” according to the filing.
Eastern Outfitters, which filed for bankruptcy in February, is just the latest retail company owned by a private equity group to run into trouble. The Limited, owned by Sun Capital, recently shut down, while J. Crew, owned by TPG Capital LP and Leonard Green & Partners L.P., in February sued its lenders, alleging that they were interfering with its restructuring plans.
Last year, Eastern Outfitters' previous owner, Vestis Retail Group, shuttered regional sports retailer Sport Chalet in order to focus on its Bob’s and Eastern Mountain Sports operations, and it ultimately sold those retailers to Versa Capital Management. At the time, Eastern Outfitters had more than $400 million in annual revenue. Yet, its financial stability did not last.
Fierce competition in the sporting goods space has taken its toll on many players in the sector — felling Sports Authority, which filed for bankruptcy and liquidated last year. Sports Authority was once the largest sporting goods chain in the U.S., but it was hobbled by mounting debt, weak e-commerce returns and failures to meet increasing challenges in the space. Dick’s Sporting Goods acquired its intellectual property and many of its stores.
Eastern Outfitters, in close cooperation with interested buyer Sports Direct, is working to avoid the pitfalls that brought down Sports Authority. It has already prevented the closure of all of its stores, and in lieu of a bankruptcy auction, it will proceed with a private sale, which will allow the company to stay out of the fray of objection from unsecured creditors, according to the Journal.