Performance Bicycle and Sears led a number of companies that landed in bankruptcy court in 2018 although the case load was lighter than recent years and a major liquidation was avoided for a change. Others major filings included Rockport, Bon-Ton, Walking Company, Remington Outdoor and AcuSport.

In past years, the industry was rattled by liquidations that quickly followed bankruptcy filings, including Sports Authority, MC Sports, Golfsmith, City Sports, Gander Mountain and Toys “R” Us. Inventories flooding the marketplace from many of those exits presented challenges selling merchandise anywhere near full-price.

The following is a sum-up of 2018’s major cases:

  • The Rockport Group filed for bankruptcy on July 18 to consummate a sale to Charlesbank Capital Partners and completed the sale to Charlesbank a few weeks later on August 2. One interesting twist in the bankruptcy was that Adidas, which sold the Rockport brand in 2015, agreed to settle a $54 million claim tied to that sale for $8 million. The bankruptcy was blamed in part on complications Rockport faced separating itself from Adidas, money-losing stores retained in the 2015 acquisition as well as the loss of key foreign sub-contractors and a contract dispute with a warehouse operator. Upon closing, Gregg Ribatt, who previous had executive roles at Crocs, Collective Brands Performance & Lifestyle Group (Sperry-Top Sider, Saucony, Keds and Stride Rite) and Stuart Weitzman, became Rockport Group’s CEO. The firm owns the Rockport, Aravon and Dunham footwear brands. In late October, it acquired Reef from VF Corp. for $139 million.
  • Sears, recently heralded as the largest retailer of fitness equipment products, filed for Chapter 11 bankruptcy in mid-October after a long battle to stay afloat amid steep declines in sales and customer traffic. In November, the retailer won court approval for $350 million in bankruptcy financing. The money will allow it to keep operating through the holidays as it tries to reorganize. Chairman Eddie Lampert’s hedge fund ESL Holdings has submitted a $4.6 billion for about 500 Sears and Kmart stores as well as the company’s other assets. Lampert bought Sears and merged it with Kmart in 2005 to form Sears Holdings. He was its CEO and primary shareholder as it lost billions of dollars and closed thousands of stores. A committee of Sears’ creditors has argued in court that the company would be better off shutting all of its stores and liquidating the assets to return the greatest amount of money to lenders.
  • Advanced Sports Enterprises Inc. (ASE), the parent company of Performance Bicycle and Bike Nashbar, filed for Chapter 11 protection on November 18. ASE is also the parent to bicycle brands Fuji, Kestrel, SE, Breezer Bikes and Tuesday Cycles; and wholesale distributor Advanced Sports International. ASI acquired Performance Bicycle in 2016 from North Castle Partners and helped it grow from 74 locations to 106. Gordon Brothers was initially hired as part of bankruptcy proceedings to liquidate 40 Performance Bicycle stores but by the beginning of December was further retained to liquidate all the chain’s remaining stores. The chain’s owner indicated stores may be reopening as part of the restructuring. An auction to acquire the assets of ASE is set for mid-January
  • The Bon-Ton Stores Inc. filed for bankruptcy on February 5 and moved to liquidate by mid-April after an unsuccessful sales process. The company operated 260 stores in 24 states, largely in the Northeast and Midwest. Banners include Bon-Ton, Boston Store, Carson’s, Younkers, Herberger’s and Elder-Beerman.
  • The Walking Company in early March filed for bankruptcy for the second time in less than a decade but was able to emerge on July 2 after securing $10 million in new equity from its controlling shareholder to support a recapitalization. With 185 stores, the retailer left bankruptcy with 23 fewer locations than when it filed. The company also owns the ABEO footwear brand.
  • Remington Outdoor Company on March 26 filed for bankruptcy to complete a debt restructuring. Nearly two months later, the firearms giant emerged after successfully implementing a plan that reduced debt levels and provided more stable financing that may help the company ride out a still soft market for firearms. Under the plan, creditors including JPMorgan Chase & Co and Franklin Advisors took ownership stakes in the company in exchange for forgiving more than $775 million of debt. Cerberus Capital Management acquired Remington in 2007 and the firearms and ammunition giant accumulated nearly $1 billion in debt.
  • AcuSport, the distributor of shooting and hunting products, filed for bankruptcy in early May. On June 29, United Sporting Companies completed the acquisition of the distribution and IT assets of AcuSport. United Sporting Companies operates through two subsidiaries, Ellett Brothers, and Jerry’s Sport Center, and is a leading nationwide distributor of hunting, outdoor and marine products.

Prior to the last few years, the industry hadn’t seen this much disruption since the turn of this century when Just for Feet, Jumbo Sports, Sportstown and Sportsmart all were forced to exit the marketplace and Sports Authority first teetered on the verge of bankruptcy, before being merged with Gart Sports.

Bankruptcies over the prior three years include:

  • 2017: Gander Mountain, MC Sports, Toys “R” Us, Shiekh Shoes, Luke’s Locker, Gordmans Stores, Payless ShoeSource, Bike America (Florida), Ironclad Performance Wear, Sports Zone Elite, Wynit Distribution, The Tannery, Maurice Sporting Goods.
  • 2016: Sports Authority, Pacific Sunwear, Vestis Retail Group (Eastern Mountain Sports, Bob’s Stores, Sport Chalet), Total Hockey, Golfsmith, Backwoods, Performance Sports Group (Bauer ice hockey gear, Easton baseball equipment), American Apparel, Yogasmoga.
  • 2015: City Sports, Quiksilver, Geneva Watch Group (Freestyle sports watch), Coolcore, Colt Defense, Hudson Trail Outfitters, Karmaloop.

Images courtesy Performance Bicycle