Gander Mountain files for bankruptcy; 3 Minnesota stores closing
The privately held St. Paul-based retailer announced Friday that it has voluntarily filed for federal Chapter 11 bankruptcy protection to help sell it and its subsidiaries, including Overton’s, an online boating retailer.
The company said three of its Minnesota stores — in Woodbury, Rogers and Mankato — will close. These are part of 32 underperforming retail locations that will begin a shutdown process in the next several weeks, the company said in a news release. A spokesman provided the closure list, which also includes two Wisconsin stores, Eau Claire and Germantown.
“Like many retailers, Gander Mountain experienced challenging traffic patterns and shifts in consumer demand resulting from increased direct-to-customer sales by key vendors and accelerated growth of e-commerce,” the company said. “Despite aggressive actions to improve the efficiency of the company’s retail operations and support functions, the underlying financial impact from underperforming stores and unproductive, excess inventory hampered efforts to create a sustainable path forward.”
The outdoors industry specifically has seen an upheaval as enormous destination stores, such as Cabela’s and Bass Pro Shops, with restaurants and aquarium exhibits, have come over the top, while discount chains like Fleet Farm and Walmart have undercut prices of more traditional sporting goods stores — and online-only sellers like Amazon become default for purchases of all things.
Last year, Bass Pro agreed to buy Cabela’s for $5.5 billion. Sports Authority declared bankruptcy last year, and in February, the parent of Eastern Mountain Sports, which never became a force in Minnesota but was well established in the Northeast, filed for bankruptcy.
Gander said it wants to be sold by May 15. It anticipates soliciting bids for an auction in late April.
The company said it will conduct “normal business operations” for the time being, and employees will continue to be paid.
Yet much remains unclear, such as:
- What happens to existing orders, backorders, customer exchanges and repairs?
- Will there be big closing sales? And if so, when do we get in line? (There’s already an online sale underway.)
GANDER HISTORYFriday’s filing marks the latest turn for a company that has seen plenty in its nearly 60-year history, which has deep ties to Minnesota and Wisconsin.
In 1960, Bob Sturgis, a former field and stream buyer for Marshall Fields, founded Gander in Wisconsin. Out of a small store in Wilmot, Wis., he marketed shooting supplies to gun dealers via mail-order catalogs. Following a 1968 federal law that restricted firearms sales through the mail, Gander Mountain Inc. expanded its offerings, growing into a major national supplier of hunting supplies.
The company went public in 1980, and another era of growth ensued that included becoming a chain of modern retail stores in the Upper Midwest.
The topsy-turvy history included liquidity problems in the mid-1990s. In 1996, the company sold its catalog business to rival Cabela’s — a fact Cabela’s would use more than a decade later to bolster its defense in a back-and-forth legal battle. In 2013, Gander accused Cabela’s of cybersquatting when Cabela’s set up GanderMountainCatalog.com and GanderCatalog.com — URL’s that directed consumers to Cabelas.com
In 1996, Gander filed for Chapter 11 bankruptcy, which resulted in Holiday Companies acquiring its assets. Holiday had already acquired all five Burger Brothers stores, the popular outdoors chain founded in Edina. The combined operations of Holiday Sports and the Gander and former Burger brothers created a formidable 26-store chain. By 2002, there were 57 such stores, all under the brand Gander Mountain.
Under the leadership of CEO Mark Baker, the company underwent a massive and nearly nationwide expansion, aggressively opening stores, culminating with going public, again, in 2004.
In 2010, the company was taken private by David Pratt and the Erickson family, which own Holiday gas stations. It remains in private ownership today, with its headquarters in St. Paul.
Here are the 32 stores slated for closure:
- Alabama (4) – Gadsden, Mobile, Montgomery, Tuscaloosa
- Georgia (3) – Augusta, McDonough, Snellville
- Illinois (3) – Champaign, Algonquin, Springfield
- Indiana (2) – Merrillville, Greenfield
- Minnesota (3) – Rogers, Mankato, Woodbury
- New York (1) – New Hartford
- North Carolina (2) – Raleigh, South Charlotte
- Tennessee (1) – Chattanooga
- Texas (10) – Houston, Killeen, Laredo, Lubbock, Round Rock, San Antonio, Sugar Land, Texarkana, Waco, West Houston
- West Virginia (1) – Charleston
- Wisconsin (2) – Eau Claire, Germantown
“Today’s action is the result of an in-depth review of the company’s strategic options undertaken in recent months to preserve the value of the company and position it for long-term success. Like many retailers, Gander Mountain experienced challenging traffic patterns and shifts in consumer demand resulting from increased direct-to-customer sales by key vendors and accelerated growth of e-commerce. Despite aggressive actions to improve the efficiency of the company’s retail operations and support functions, the underlying financial impact from underperforming stores and unproductive, excess inventory hampered efforts to create a sustainable path forward.
“The company’s strategic review yielded the following conclusions:
- A narrowly focused and lower cost operating model is necessary to position the company for profitable growth;
- The company does not have the financial capacity or time to reset its operations to fully implement the new model and, as a result;
- The best available path forward is to sell the company on a going-concern basis.
“The court’s protections will enable us to manage the sale process on an expedited basis while protecting the interests of our customers, employees and other stakeholders. Gander Mountain is in active discussions with a number of parties interested in a going-concern sale and expects to solicit bids prior to an auction to be held in late April 2017. The company expects to submit the winning bid to the Court for approval in early May and anticipates a closing of the sale by May 15.
“The company generally expects to conduct normal business operations during the pendency of its restructuring. Employee pay will continue to arrive on time and in full, employee benefits will remain in place, retirement accounts are intact and protected. As a product of the company’s strategic review, 32 underperforming retail locations will begin a shutdown process in the next several weeks.
“The company has obtained a committed debtor-in-possession (“DIP”) financing facility underwritten by Wells Fargo. Subject to court approval, this DIP financing, combined with cash from operations, is expected to provide sufficient liquidity to support the company’s continuing business operations and to minimize any disruption during the reorganization process.
“The petitions were filed in the U.S. Bankruptcy Court for the District of Minnesota, case numbers 17-30673 and 17-30675. More information about Gander Mountain’s restructuring is available online at www.donlinrecano.com/gmc. Court filings and claims information are available at the U.S. Bankruptcy Court website, http://www.mnb.uscourts.gov/.”