Too sudden! Another big brand filed for bankruptcy

In recent years, with the changes in global market demand, many companies have found it increasingly difficult to survive.

Even the popular tracks have been hit by the market, and some big brands can’t bear it anymore and have filed for bankruptcy!

Two leading companies in the category jointly filed for bankruptcy

Recently, Eastern Mountain Sports, a leading American outdoor brand , and Bob's Stores, a discount chain, jointly filed for Chapter 11 bankruptcy protection.

It is understood that the bankruptcy application was filed by its parent company GoDigital Media Group.

Dave Barton, president of Bob's Stores and CEO of Mountain Sports LLC, said that the company is currently in a financial crisis and urgently needs funds to pay employees' wages. At the same time, the company has a $29.4 million loan and $27 million in unpaid rent from PNC Bank, as well as other operating debts. The two companies need to restructure their debts.

The reason why these two companies went bankrupt, in addition to the financial crisis, was also related to the sharp decline in market demand. According to data from the U.S. Department of Commerce, the sales of sporting goods in the United States continued to decline this year, market competition intensified, and other competitors used various means to attract consumers. The market competitiveness of Eastern Mountain Sports and Bob's Stores continued to decline, and their operations became more difficult, eventually leading to bankruptcy.

Currently, Eastern Mountain Sports' official website is offering discounts and promotions, and Bob's Stores' website shows that it is under construction and says it will be back online after the online shopping experience is upgraded.

(Image source: Bob's Stores official website)

Both companies have been established for more than 50 years. Eastern Mountain Sports was founded in 1967 by two camping enthusiasts, Alan McDonough and Roger Furst. It currently operates more than 20 stores, mainly selling outdoor equipment.

Bob's Stores was founded in 1954 and is named after its founder, Bob Lapidus, who opened his first store in Middletown, Connecticut in 1954. The company mainly sells sports equipment and casual clothing.

In 2003, the brand was acquired by TJX, the owner of Marshalls and TJ Maxx, and in 2008, it was sold to a private equity firm.

In fact, this is not the first time these two companies have filed for bankruptcy.

In 2012, Versa Capital Management acquired Eastern Mountain Sports and placed the brand under Vestis Retail Group, which at the time also included Bob's Stores.

But in 2016, Vestis Retail Group filed for bankruptcy.

In 2017, Eastern Outfitters LLC, the parent company of Eastern Mountain Sports and Bob's Stores, filed for bankruptcy protection in court. The reason for bankruptcy at the time was also that it could not bear the competitive pressure in the industry.

This year, British company Sports Direct (now Frasers Group) acquires Eastern Mountain Sports and Bob's Stores .

In May 2022, Bob's Stores and Eastern Mountain Sports were acquired by GoDigital Media Group as part of a bankruptcy reorganization agreement.

In just the past two years, Eastern Mountain Sports and Bob's Store filed for bankruptcy protection for the third time.

Another well-known clothing brand filed for bankruptcy!

In addition to Eastern Mountain Sports and Bob's Stores, another well-known American clothing brand also couldn't hold on and filed for bankruptcy.

Not long ago, Delta Apparel, a well-known American clothing company , voluntarily filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code.

It is understood that the reason for the bankruptcy is that the company has fallen into a serious financial crisis due to weak demand and rising raw material prices. The company's current assets are approximately US$337.8 million, but its total debt has reached US$244 million.

Delta Apparel's performance has become less optimistic since 2024, with revenues declining in the first quarter and losses widening further in the second quarter. In the first half of 2024, Delta Apparel's total operating revenue was approximately $158.9 million, down 27% from the same period last year; its losses were approximately $44.8 million, or $6.38 per share.

Delta Apparel said that due to liquidity issues and a shortage of funds, it was unable to purchase raw materials needed for operations and was unable to pay employee wages and benefits. Moreover, according to document information, some of Delta Apparel's financial covenants were not in compliance and it was unable to raise additional capital to purchase the required production inputs. In addition, in fiscal year 2023, the demand for some of Delta Apparel's products decreased significantly, and this trend continued into 2024.

Delta Apparel also mentioned liquidity issues in its previously disclosed financial reports. The company mentioned that suppliers do not allow the extension of credit terms, and the ability of other suppliers to provide raw materials is also limited. The company is currently in default on its US revolving credit facility due to its failure to comply with certain financial covenants. The lender has not yet required full repayment of the debt, and the company is negotiating with the lender and is trying to regain compliance within the next 12 months.

It is clear that Delta Apparel failed to resolve these problems and had to seek bankruptcy protection.

Delta Apparel is also a long-established American clothing company. Founded in 1999, the company focuses on designing, manufacturing, sourcing and marketing a diverse portfolio of sportswear and lifestyle apparel products. Major brands include Soffe, Delta and Salt Life, and products include T-shirts, sportswear, swimwear, outdoor clothing, etc. Delta Apparel's business is spread all over the world, mainly providing products to consumers through retail stores, wholesale channels and e-commerce platforms.

(Image source: Delta Apparel official website)

When Delta Apparel announced its bankruptcy, it also stated that it would continue to operate the company's business in the form of a debtor-in-possession and would sell the company's assets through one or more competitive bidding processes or other strategic alternatives.

Delta Apparel has agreed to sell its Salt Life brand to Forager Capital Management LLC for approximately $28 million .

After Delta Apparel announced it had filed for bankruptcy, the company's stock price fell 33% to $0.39 in pre-market trading, a stark contrast to the company's heyday of $30.

Moreover, Delta Apparel recently announced that it had received a notice from the New York Stock Exchange Regulatory Corporation stating that the New York Stock Exchange Regulatory Corporation has initiated the process of delisting the company's common stock, which will officially take effect on July 1.

The sportswear track has always been a hot field, but with the continuous changes in the consumer market, many sportswear brands have begun to face various problems, and even the international giant Adidas is no exception.

Surprisingly, Adidas suffered its first annual loss in more than 30 years.

According to the annual financial report released by Adidas, Adidas' global revenue in 2023 was 21.427 billion euros, which was the same as in 2022 after excluding the impact of exchange rate fluctuations. However, the company suffered a net loss of 58 million euros in 2023, which was the first loss for Adidas since 1992.

According to industry insiders, the weak US market, excess inventory at retailers and the discontinuation of sales of the popular Yeezy series are the main reasons for Adidas' losses.

In 2023, Adidas' sales in North America fell 16%, with a drop of as much as 21% in the fourth quarter.

Adidas expects that North American market performance in 2024 will continue the weak trend in 2023 due to high inventory and declining demand.

In general, the market is changing rapidly. If companies want to remain invincible and better avoid market risks, they must adjust their operating strategies in a timely manner and improve their core competitiveness in the market.

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