Austin-based outdoor retailer Backwoods has filed Chapter 11 bankruptcy. Last week, a bankruptcy judge approved an emergency request from Backwoods to borrow $3 million to buy inventory in time for the holiday shopping season and pay vendors, employees and rent.
“Backwoods, like other outdoor retailers, has experienced reduced sales, decreased net profit margins, and more recently, liquidity issues,” said company president Jennifer Mull Neuhaus in the filing. “The holiday season is one of the most important sales period. Backwoods derives approximately 30 percent of its annual revenue from holiday sales.”
The retailer cited competitive pressures from online and big box retailers, but said there are currently no plans to close stores, its ecommerce operations or Backwoods Adventures, its travel company.
Backwoods was founded in 1973 with a single store in Wichita, Kan., and has grown to 10 stores in Arkansas, Kansas, Nebraska, Oklahoma and Texas. It also operates stores in Colorado and Missouri under the Neptune Mountaineering and Dynamic Earth brands. The company has about 150 employees and annual sales of about $18 million, according to court filings. It largely has financed its own operations from those sales but recent struggles have forced the retailer to borrow money during the last 18 months. Its debt includes about $500,000 in loans and credit, plus about $3.7 million in unsecured trade debt and unpaid obligations, according to the court documents. It listed more than $10 million in liabilities.
In an effort to maintain customer loyalty, Backwoods is asking for permission to continue honoring gift cards that were issued prior to bankruptcy. There are about 5,600 outstanding gift cards still in circulation. On November 10, a judge approved a request by Backwoods to borrow $3 million in debtor-in-possession financing from GemCap Solutions.
Among its major creditors, according to court documents, are Patagonia ($388,330), Osprey Packs ($112,653), Arc’teryx ($105,467), Toad&Co ($93,514), Wolverine Worldwide ($90,735) and Prana ($87,945), among other familiar outdoor brands.
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