Edwin Watts Files for Bankruptcy; Worldwide Golf to Buy Some Stores -- Update 11/04 02:49 PM
(Updates with auction details in fifth paragraph, other details throughout.)
By Katy Stech
Struggling golf retailer Edwin Watts filed for bankruptcy Monday, saying that competition from big-box stores and poor consumer spending has forced executives at the 91-store chain to pursue a sale that could reduce its footprint.
Officials of the private-equity-backed company who put the Florida-based chain into Chapter 11 protection in U.S. Bankruptcy Court in Wilmington, Del., said they found a buyer--Worldwide Golf Shops affiliate GWNE Inc.--that has promised to purchase "a significant number" of shops and keep them open. They also found a liquidation company to sell off inventory at the stores that are slated to be closed.
Company officials said in a statement that they haven't finalized which of the 648-worker chain's stores would close.
The proposed sales, which could be thrown out if better offers emerge at a December bankruptcy auction, would give the company at least $45 million to pay off its debts, according to court papers. The company said that it has fully spent a $50 million loan from PNC Bank N.A. and that it has another $36.5 million debt on its books.
PNC Bank officials have agreed to extend more money while the company is in bankruptcy. The fine print of that $38 million borrowing deal calls for company officials to hold an auction on or before Dec. 4 and for the deal to close by Dec. 6.
The borrowing deal, the proposed auction rules and the final offer will need a sign-off from Bankruptcy Judge Mary Walrath.
Chief Financial Officer Lynda Barr said that consumer spending within the $ 2.62 billion U.S. golf retail industry hasn't fully recovered from the financial crisis.
The economic recession came soon after an affiliate of the private-equity firm Sun Capital Partners Inc. bought the company in 2007. By that point, executives had laid out a plan to expand the chain, mostly by purchasing struggling competitors. The company said it has bought 29 stores and opened 10 new ones since that year.
Ms. Barr also blamed the company's struggles on several "lackluster" product launches. The introduction of one recent product, which wasn't identified in court papers, was "not well received by the public" and led the product's supplier to discount it earlier than Edwin Watts officials expected, she said in court papers. As a result, the chain has had to discount its prices as well-- hurting profitability.
Unfavorable weather so far this year also has kept golfers off the courses and away from its shops, which offer more than 46,800 products that consumers can try out in a store's indoor hitting area and putting greens, according to court papers. Earlier this year, the company said that the number of golf rounds was down by almost 15% compared with a year ago, citing figures from the National Golf Foundation.
The retailer was founded in 1968 when young golf professional Edwin Watts opened a shop in Fort Walton Beach, Fla., "with just $380 worth of equipment," according to the company's website. Mr. Watts wanted his shop to stand out by offering golf equipment on top of apparel.
The company is still based in the same Florida panhandle town, where its 62, 000-square-foot warehouse distributes about 33,000 packages and almost $15 million of products a year. The company's website says that it distributes 14 million catalogs each year.
Today, 32 of the company's retail stores are in Florida. Its stores also have technology that can analyze a golfer's swing.
(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection. Go to http://dbr.dowjones.com)
Write to Katy Stech at katy.stech@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
11-04-131449ET
Copyright (c) 2013 Dow Jones & Company, Inc.
Get more news on:SYMBOLS: NEWS TYPE: Corporate Events: Mergers and Acquisitions, Top News, Top Stories: General, Corporate EventsSECTORS: Consumer Discretionary, Financials, Capital Markets
(Updates with auction details in fifth paragraph, other details throughout.)
By Katy Stech
Struggling golf retailer Edwin Watts filed for bankruptcy Monday, saying that competition from big-box stores and poor consumer spending has forced executives at the 91-store chain to pursue a sale that could reduce its footprint.
Officials of the private-equity-backed company who put the Florida-based chain into Chapter 11 protection in U.S. Bankruptcy Court in Wilmington, Del., said they found a buyer--Worldwide Golf Shops affiliate GWNE Inc.--that has promised to purchase "a significant number" of shops and keep them open. They also found a liquidation company to sell off inventory at the stores that are slated to be closed.
Company officials said in a statement that they haven't finalized which of the 648-worker chain's stores would close.
The proposed sales, which could be thrown out if better offers emerge at a December bankruptcy auction, would give the company at least $45 million to pay off its debts, according to court papers. The company said that it has fully spent a $50 million loan from PNC Bank N.A. and that it has another $36.5 million debt on its books.
PNC Bank officials have agreed to extend more money while the company is in bankruptcy. The fine print of that $38 million borrowing deal calls for company officials to hold an auction on or before Dec. 4 and for the deal to close by Dec. 6.
The borrowing deal, the proposed auction rules and the final offer will need a sign-off from Bankruptcy Judge Mary Walrath.
Chief Financial Officer Lynda Barr said that consumer spending within the $ 2.62 billion U.S. golf retail industry hasn't fully recovered from the financial crisis.
The economic recession came soon after an affiliate of the private-equity firm Sun Capital Partners Inc. bought the company in 2007. By that point, executives had laid out a plan to expand the chain, mostly by purchasing struggling competitors. The company said it has bought 29 stores and opened 10 new ones since that year.
Ms. Barr also blamed the company's struggles on several "lackluster" product launches. The introduction of one recent product, which wasn't identified in court papers, was "not well received by the public" and led the product's supplier to discount it earlier than Edwin Watts officials expected, she said in court papers. As a result, the chain has had to discount its prices as well-- hurting profitability.
Unfavorable weather so far this year also has kept golfers off the courses and away from its shops, which offer more than 46,800 products that consumers can try out in a store's indoor hitting area and putting greens, according to court papers. Earlier this year, the company said that the number of golf rounds was down by almost 15% compared with a year ago, citing figures from the National Golf Foundation.
The retailer was founded in 1968 when young golf professional Edwin Watts opened a shop in Fort Walton Beach, Fla., "with just $380 worth of equipment," according to the company's website. Mr. Watts wanted his shop to stand out by offering golf equipment on top of apparel.
The company is still based in the same Florida panhandle town, where its 62, 000-square-foot warehouse distributes about 33,000 packages and almost $15 million of products a year. The company's website says that it distributes 14 million catalogs each year.
Today, 32 of the company's retail stores are in Florida. Its stores also have technology that can analyze a golfer's swing.
(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection. Go to http://dbr.dowjones.com)
Write to Katy Stech at katy.stech@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
11-04-131449ET
Copyright (c) 2013 Dow Jones & Company, Inc.
Get more news on:SYMBOLS: NEWS TYPE: Corporate Events: Mergers and Acquisitions, Top News, Top Stories: General, Corporate EventsSECTORS: Consumer Discretionary, Financials, Capital Markets
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