Sports Retailer Takes Final Step Before Liquidation

Back in July, Olympia Sports suddenly started closing all of its stores.

Even though both the sportswear and athletic equipment markets are projected to grow at skyrocketing rates in the next five years, the landscape has not been an easy one to ride out post-pandemic.

Over the last two years, competition has come in not just from the usual big players such as Nike  (NKE) – Get Nike Inc. Report, Adidas  (ADDDF) and Lululemon  (LULU) – Get lululemon athletica inc. Report but also big-box retailers like Target  (TGT) – Get Target Corporation Report amping up their sportswear offering with new lines.

Some, like Dick’s Sporting Goods  (DKS) – Get Dick’s Sporting Goods Inc Report, have fared fairly well — even though shares are down slightly year-over-year, the retail beat analyst expectations and raised earnings expectations to between $10 and $12 in its latest earnings call.

Liquidation Of Sports Clothes, Equipment

Things have not been nearly as rosy as Olympia Sports. In July, the sports retailer that was founded out of Maine in 1975 announced that it would be closing all 70 of its stores across the Northeast and Midwest regions.

In another ominous sign, it also got rid of returns and made all sales at its stores final.

At the start of this week, the company filed for Chapter 11 bankruptcy and said that it would fully liquidate the 35 or so stores still operating by Sept. 30.

According to the bankruptcy papers obtained by the Wall Street Journal, Olympia owed $28.7 million in unsecured debt to 570 creditors.

Olympia’s assets totaled approximately $10 million while its liabilities added up to more than $50 million. 

Chief Executive Mark Coffey, who stepped into the role in March 2022, blamed poor sales for such a negative outcome for a brand that has been around for over 45 years.

“Olympia plans to continue liquidating its stores before proposing a plan of liquidation in this case,” Coffey wrote in the bankruptcy affidavit. “Continuing with the GOB Sales Process without interruption will offer the estates the best chance of maximizing returns to creditors.”

Olympia Sports was, in 2019, acquired by running store chain JackRabbit which in turn was then owned by private equity firm CriticalPoint Capital.

According to Coffey, the firm worked to create a “family brand” alongside JackRabbit and, which the company bought from Walmart  (WMT) – Get Walmart Inc. Report in 2020. But ultimately, the concept did not work — JackRabbit was resold to Fleet Feet for $47.7 million in 2021 while’s inventory and domain went to DSW  (DSW) – Get Designer Brands Inc. Class A Report for $4.6 million.

The Market For Sports Is Still There

The sad fate of Olympia Sports should not be used to reflect the overall athletic wear and sports equipment markets overall. The latter is projected to grow from $170.94 billion in 2021 to $267.61 billion in 2028.

But high demand often also comes with saturation and both traditional and non-traditional retail players are working hard to carve out their space in this area.

In an effort to ramp up direct-to-consumer efforts, Nike has pulled its products from many former partners. Walmart and Target have both released new sports-themed private labels and partnered with celebrities to promote them.

With China as an emerging player, smaller brands without a local or regional presence will also struggle when compared to major international names.

“We think the market will be surprised to learn how broad-based the cultural factors driving athletic apparel and footwear sales are,” writes Jay Sole, a Morgan Stanley analyst covering branded footwear and apparel.

Related Posts

Union Capital Financial Group Ltd, registered in the British Virgin Islands, does not provide investment services inside the United States. The company only provides consulting, advisory and educational services.