Bankruptcy now leads an unexpected company to close all stores after reporting assets and liabilities between $50 million and $100 million.
Bob’s Stores, which shares a corporate parent with Eastern Mountain Sports (EMS) filed for Chapter 11 bankruptcy on June 18 in a federal court in Delaware.
The company has a total of 369 creditors, according to the filing.
At the time, the company did not share much publicly but did file a notice with the state of Connecticut, where it has its headquarters.
The company reported that it could not meet its obligations to employees.
“We would like to have given you more notice of this action but were unable to do so because the bank has informed us within the last week that it will refuse to fund the employee health insurance premiums, 401k administration, payroll, as well as other critical financial obligations which, if not paid, will likely prevent us from being able to operate the business going forward,” Bob’s and EMS President David Barton wrote in a May 21 letter to the state Department of Labor.
Despite that letter, there was some hope that at least some of the stores could be saved or a buyer would emerge for the retail brands that served New England, New York, and New Jersey, reports TheStreet.
Any hopes of a Bob’s revival were cut when the company shared a press release on July 2nd saying the brand would shut down.
“Bob’s Stores will close all of its Bob’s locations and liquidate all inventory, as part of the Chapter 11 restructuring petition filed on June 18, 2024.
Despite making swift and aggressive changes to the company’s structure and operations, Bob’s Stores was unable to secure the finances needed to maintain operations,” the company shared.
No mention was made of EMS and RetailDive attempted to contact the company (which no longer has contact info on its website) but the request was not answered.
“Bob’s stores began Going Out of Business sales in stores on Friday, June 28, with discounts of 30-70% off,” according to the media release.
“We regret that our financial position necessitated the liquidation of Bob’s Stores. Bob’s has been a stalwart of our local communities for nearly 70 years, and we know our customers remember us as having been there for major moments in their lives,” Dave Barton, Bob’s president, shared.
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Also Read: Another Mall Clothing Retailer Now At High Risk of Bankruptcy
Other Economy News Today
An essential company now files a surprising bankruptcy after miscalculating demand for its inventory after the Covid-19 pandemic.
Supply Source Enterprises, a leading provider of branded and private label cleaning products and personal protective equipment, on May 21 filed for Chapter 11 protection to seek a sale of its assets.
Supply Source brands include The Safety Zone and Impact Products.
The Guilford, Connecticut debtor listed $50 million to $100 million in assets in its petition and $180 million in funded debt, which includes $80 million owed on a term loan credit facility, $60 million owed on an asset-based loan, and about $40 million in unsecured debt.
Before the Covid-19 pandemic, which generated huge demand for cleaning supplies and personal protective equipment in 2020, Supply Source had been consistently profitable with stable single-digit growth, according to a declaration from the debtor’s Chief Restructuring Officer Thomas Studebaker.
Once the pandemic hit in 2020, the debtor had substantial growth due to high demand for safety, hygiene and sanitation products
The debtor reported adjusted Ebitda of $93 million in 2020 which was nearly a 300% increase over the previous year.
However, the company’s financial performance deteriorated in subsequent years.
Based on the unprecedented demand in 2020, the company commissioned an industry study in early 2021 that concluded that the Covid-19 pandemic would fundamentally change the cleaning supplies and protective equipment industry and market for its products.
The study also estimated that the company’s Covid-related growth would likely be sustained through 2024.
In contemplation of continued customer demand at elevated prices, based on the study’s data, the debtor increased purchases of inventory even though the costs were higher due to supply chain constraints during the pandemic.
Despite the study’s assurance that growth would be sustained for years, the pandemic’s positive effect on the market faded by the end of 2021 and demand for PPE decreased to normal rates, reports TheStreet.
The reduction in demand led to large amounts of excess inventory that the company could not sell in the same quantities and prices.
The excess inventory forced the debtor to secure additional storage space, which increased storage costs.
These factors tightened the company’s liquidity and led to a decline in annual revenue in 2023 by 26% from 2022, resulting in a negative 2023 Ebitda of $13 million.
The debtor’s liquidity issues led to it being overdrawn on its asset-based loan facility by $30 million.
The ABL lender in February 2024 swept the debtor’s bank accounts, further impacting the company’s financial distress.
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Also Read: This Massive Mall Retailer Is Now Closing In California
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