Olympia Sports files for bankruptcy as it operates through liquidation

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Dive Summary:

  • Olympia Sports filed for Chapter 11 bankruptcy on Monday after beginning a full store liquidation process in the summer.
  • After moving to close many of its stores earlier this year, the company in July formed a plan to close its entire footprint. With 35 stores remaining in operation, Olympia plans to complete the liquidation of its stores by September 30.
  • CEO Mark Coffey said in court documents that the bankruptcy was necessary to retain employees and ensure smooth operations through the shutdown and shutdown process.

Dive Insight:

Founded in 1975 by Ed Manganello, Olympia Sports began in Portland, Maine, before spreading throughout the Northeast and Mid-Atlantic. At its peak, it operated over 230 stores, before closing some of its unprofitable stores in the seven-year period between 2013 and 2019, Coffey noted.

Private equity firm CriticalPoint Capital acquired Olympia in the fall of 2019 through specialty running retailer JackRabbit that CriticalPoint acquired from Finish Line in 2017. Following the deal, Olympia was left with 75 total stores.

The acquisition marked an expansion for CriticalPoint’s assets in the sporting goods space, held collectively under the Managing Specialty Group (RSG), which is part of the group of debtors in the Chapter 11 case. It also marked the beginning of a period of turbulence for the company , partly due to the disruption from the pandemic.

In 2020, RSG acquired Shoebuy.com from Walmart as the latter was looking to streamline its e-commerce assets. Coffey said that in the year before RSG acquired Shoebuy.com from Walmart, the online shoe retailer was losing about $19 million on $131.4 million in sales. However, the Olympia parent thought Shoebuy could become profitable by transitioning from its “home-grown” e-commerce platform, which required a large staff to run, to a more streamlined one.

RSG companies, including Olympia, entered into a contract with Salesforce in 2021 for what Coffey called a “comprehensive” e-commerce package. However, RSG management expected gross sales to exceed $400 million once everything was up and running in Salesforce. But Coffey said “it didn’t come to fruition.”

In fact, Shoebuy.com’s average gross sales per day fell by nearly $140,000. Coffey said a new order management system from Salesforce was to blame, which resulted in duplicate and raw orders being sent to the wrong recipients. Along with falling sales, the company was spending money trying to fix its problems and still dealing with the lingering effects of COVID-19.

More money was diverted from Olympia as management focused on the well-performing Jackrabbit, who was sold to Fleet Feet in 2021 for $47.7 million. That helped pay down debt, but with some executives leaving Jackrabbit, challenges were left behind for new management, said Coffey, who stepped into the CEO role in March.

Among the issues was Salesforce’s contract, which Coffey said the company was unable to renegotiate even after losing Jackrabbit, one of the main users of the Salesforce platform. With Shoebuy.com still struggling, RSG sold its inventory and IP, which includes the Shoes.com domain name, to parent DSW Designer Brands for $4.6 million this April.

After bringing in advisers, RSG decided to close a large portion of Olympia’s remaining stores, and by summer had moved to close all of them. That plan is still in place. Coffey said the company’s bankruptcy filings were necessary so Olympia, with 324 employees, could meet its obligations to its workers and customers through the liquidation process.

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