Athletic and casual clothes retailer Bob's Stores and outdoor gear specialist Eastern Mountain Sports (EMS) both filed for bankruptcy.
This also led the company to announce that they would be closing ten stores, as foot traffic in their locations has been continuously slow since the pandemic.
Bob's Stores and EMS Enter Financial Woes
Bob's EMS Holdings, the parent company of Bob's Stores and EMS (Eastern Mountain Sports), has reportedly filed for Chapter 11 bankruptcy protection in Delaware.
The Concord Monitor says the company operates roughly 50 stores across the Northeast and is based in Connecticut.
Bob's Stores has shuttered all of its New Hampshire locations, except for one near Tuscan Village in Salem, after cutting back dramatically on the size of its brick-and-mortar footprint. The company's website was also unavailable on Thursday, suggesting potential additional operational troubles.
Bob's Stores and EMS generated $131.9 million in net revenue last year, according to court documents cited by Retail Drive. However, a financial crisis earlier this year prompted the necessity for a Chapter 11 bankruptcy filing, according to company representative Barton.
The situation escalated when PNC Bank, on March 29, declared a default under their loan agreement, seizing control over the chains' cash and receivables and choosing to fund only specific expenses.
Tensions between the retailers and PNC Bank reached a high point on June 12, when the bank stopped funding their operations. This has left the company struggling with a severe cash shortage, unable to pay for essential expenses such as utilities, staff salaries, rent, insurance, and taxes.
Furthermore, the company still owes approximately $935,000 in unpaid wages. As a result, an emergency motion for cash collateral has been requested to ensure continued operation.
Both chains are currently exiting a distribution center to reduce costs and opting to operate directly from their larger retail locations. Meanwhile, at the time of reporting, the Bob's Stores website was noted as "under construction."
In contrast, the EMS website remains active, featuring a sale across all items.
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Retail Ice Age Hits Bob's Stores and EMS
Earlier in June, executives at Bob's Stores and Eastern Mountain Sports decided to shutter several underperforming locations.
The U.S. Sun reports that Burt Flickinger III, managing director at Strategic Resource Group, a retail and consumer goods consulting firm based in Manhattan, expressed to CT Insider that while these chains are capable of operating profitable and valuable stores, they are now grappling with what he described as an "accelerating retail ice age."
In response to these challenges, Bob's Stores has initiated closing sales, offering discounts of up to 80% on merchandise. Following the bankruptcy filing, GoDigital Media Group, the chain's parent company, expressed disappointment over the necessary restructuring.
In a statement released to the media, GoDigital Media Group outlined the financial struggles that led to the decision, including a market downturn that began in April 2023, alongside rising interest rates and inflation, all contributing to poor company performance.
They emphasized that the restructuring was essential for maintaining a sustainable business capable of serving its communities and pursuing future growth.
The company also reflected on the significant role Bob's Stores and EMS have played in their communities over the past 70 years, acknowledging the profound impact the restructuring will have on employees, business partners, and customers.
They concluded with gratitude towards the community for its ongoing support.
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