A season of upheaval is continuing for the biggest players in the outdoor retail arena.
According to a report by Reuters earlier this month, Gander Mountain — the large-scale recreation retailer with a location at Southridge Centre — is preparing to file for bankruptcy.
If that happens, it would follow the October announcement from Bass Pro Shops that it would buy competitor Cabela’s for $4.5 billion. However, that blockbuster acquisition still hasn’t been approved by federal regulators, and Capital One is reportedly having second thoughts about its application to purchase Cabela’s popular credit card operations.
A Gander Mountain bankruptcy would raise more concerns about outdoor retailers and their massive bricks-and-mortar locations being unable to adjust to the rapidly changing retail industry — problems that all kinds of larger outlets are struggling with.
When Gander Mountain opened its Southridge Centre location in September 2006, its hunting and fishing wares drew in plenty of outdoor enthusiasts, despite its debut being under the radar. Gander Mountain management said at the time that West Virginia had a strong customer base passionate about the outdoors, an ideal location for steady business.
The outdoor industry remains a lucrative market, especially in West Virginia, where hunting alone contributes $500 million annually to the state’s economy, according to Southwick Associates data cited by the state Division of Natural Resources. But Gander Mountain said in a statement that it is not immune to the industry’s ups and downs, in response to recent bankruptcy reports.
“Like most retailers, we are subject to normal economic cycles, changes in our industry and shifts in consumer demand that require us to adapt our business accordingly,” the statement said. “It’s been that way since 1960, when we started out as a catalog company in small-town Wisconsin, and it remains the case today.”
The statement also said Gander Mountain is reviewing its strategic options with the help of investment banking company Houlihan Lokey, which will serve as an independent adviser.
David Dawley, the director of the Robbins Center for Global Business and Strategy at West Virginia University, said the statement suggests Gander Mountain isn’t going to file for Chapter 7 bankruptcy, in which the company would be forced to liquidate all of its assets.
“They hired financial counsel, so they’re obviously looking at something strategic,” he said. “There are a number of signals that suggest they wouldn’t go completely out of business.”
Instead, he said, Gander Mountain is more likely to file for Chapter 11 bankruptcy. This would allow the company to negotiate a new payment plan with its creditors and keep its retail operations afloat while it reorganizes.
The company would have to undergo changes to differentiate itself from competitors to make that worthwhile, Dawley said.
“The Cabela’s and Bass Pro Shops merger has changed the structure of competition,” he said. “Gander Mountain may simply be repositioning itself for how it will compete. They aren’t going to be selling the exact same products, they may move to more of a niche market for certain products.”
That’s the same suggestion Michael Ingram, the state Division of Natural Resources licensing unit manager, made for how Charleston’s Gander Mountain can survive.
“There’s so much more competition that I don’t think they can keep doing the exact same thing,” Ingram said.
Ingram said, if Gander Mountain is forced to close the Charleston location as part of a shift in strategy, outdoors enthusiasts still have plenty of options. Cabela’s opened its own location at Southridge Centre, less than a mile from Gander Mountain, in 2012. The nearby Wal-Mart and Dick’s Sporting Goods also sell their own share of outdoor products, taking another portion of its potential market. They even sell hunting and fishing licenses, Ingram said.
If Gander Mountain files for bankruptcy, it wouldn’t be the first time. The company also declared Chapter 11 bankruptcy in 1984 and 1996.
When Gander Mountain opened its 75,000-square-foot store at the Southridge Centre, it was the company’s 105th location since it began. Since then, the number has jumped to 162 stores in 26 states. Most of that growth came in 2011 to 2016, with 55 stores opening, former company president Derek Siddons told the Minneapolis Star Tribune. Siddons left the company in November.
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