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Today on The Rock Fight (an outdoor podcast that aims for the head) Colin opens the show by lamenting how outdoor brands never really figured out what to do with TikTok including a look at the one brand that actually does: Gnara.
Then he and Producer Dave are joined by outdoor industry insider and Rock Fight Consigliere, Eoin Comerford to talk about the rumors that Canadian outdoor retailer MEC has been sold. They also take a look at a couple of names that have turned up on Retail Dive's bankruptcy watch list.
And be sure to stick around for an musical edition of The Parting Shot!
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Colin True
00:00:00.960 - 00:01:41.746
Hey guys, before we get started today, today's episode talks a lot about TikTok, and we recorded it in the brief window between when TikTok shut down and when it came back online. So we speak a lot about it, like it's in the past tense. But as we all know, TikTok is back, so keep that in mind.
You're listening to this, that that's when this was recorded and we didn't know that it was coming back so quickly. But anyway, the points we make are relevant, so enjoy the show.
Welcome to the Rock Fight, where we speak our truth, slay sacred cows, and sometimes agree to disagree. This is an outdoor podcast that aims for the head. I'm Colin True.
It's Monday and today we're going to talk about the impact TikTok had or didn't have on the outdoor industry now that it's gone.
And then later on, consigliere to the Rock Fight, Owen Comerford, of course, stops by to talk to producer Dave and myself about the rumored sale of MEC and some retailers that may be having a tough time in 2025. But before we get to that, some housekeeping items and programming reminders.
Come back to the Rock Flight this Wednesday when outdoor journalist Justin Hausman and I will be talking about the latest headlines to come out of the outdoor adventure community. And then also come back this Friday to hear my conversation with Andrea Kelly of Make plus Equal.
Folks, I gotta ask, have you subscribed to Rock Fight's weekly newsletter? If not, you still have time to get the original Rock Fight content that we don't put anywhere else.
You head to rockflight Co and click Join the mailing list to sign up. That will come out tomorrow on Tuesday.
And lastly, if you're new around here, or even if you're not new around here, please subscribe and join the Rock Fight by lobbing a little stone at the follow button on whatever podcast app you are listening to us on. Also give us that five star rating. All right, let's start the show.
Producer Dave
00:01:41.818 - 00:01:45.870
Welcome to the Rock Fight. Rock Fight. Rock Fight.
Doug Schnitzpahn
00:01:49.290 - 00:02:52.500
The outdoors is not a niche. It's way bigger than that. The outdoors is essential to our lives, essential to who we are as a species.
And as the world continues to get smaller, as new advances in technology push us to the limits of the planet, the outdoors is more important than ever. Open Container is here to explore this new idea of the outdoors.
We'll strive to uncover stories about creativity, adventure, conservation, politics, and the people who make the outdoor space so vibrant. The world is full of anxiety right now. Climate change, politics, cultural upheaval. But fear not, there are answers in the outdoors.
I'm Doug Schnitzpahn and on this show we will talk to people who are looking to nature to find the solutions we all need.
We will be having honest conversations about how the outdoors can change us, how it heals us, how we learn from it, and how we can build a better world from what we learn about being outdoors. So please join us. Open the container and find out what's inside. Let's get some.
Colin True
00:02:55.600 - 00:03:06.728
Open Container launches January 21st. Find and follow the show on Apple Podcasts, Spotify or wherever you get your podcasts. You're listening to Rock Fight Radio.
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Colin True
00:04:06.150 - 00:10:03.686
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With all new branding and new packaging on the way, the time is now to get in on a refreshed sock wall for spring and fall. All right, let's get back to the show.
All right, today's opening shot is presented by Garage Grown Gear, whose winter sale launches tomorrow and runs through January 27th. You're going to head to garagegrowinggear.com to check out some amazing deals and we'll tell you a little bit more about coming up.
But as producer Dave and I are recording this short form video giant TikTok is gone. I found out that the app and website had been officially shut down. On Saturday night.
I was watching the lions and Commanders playoff game and my twin middle aged middle school, middle aged middle school age daughters emerged from their bedrooms sort of laugh crying about the fact that one of their favorite distractions and form of communication had indeed gone away and the dust hasn't yet settled right on TikTok's availability here in the United States.
I think the most likely outcome is that we're going to be back wasting hours of our lives While scrolling through TikTok's bottomless pit of content as soon as President McFuckwad stops into the office later this week.
And if it indeed does come back, it will provide another crack at the bat for outdoor brands who never really figured out the best way to use it to begin with. Because here's the thing about TikTok that I haven't heard anyone in the outdoor industry talk about.
To me, it's the perfect platform to trap a would be outdoor enthusiast in an inescapable loop of content that, if smartly produced, can simultaneously drive outdoor inspiration. Engage with the consumer to your brand, bring them into your brand. Oh, and by the way, provide an immediate shopping experience with the TikTok shop.
And regular TikTok users or former regular TikTok users know what I'm talking about. Of the three major short form video platforms TikTok, Instagram Reels and YouTube Shorts, none can hook you like TikTok.
Identify even the most strong willed anti social media individual to defeat TikTok's algorithm. If you ever wanted to watch an hour of your life evaporate before your eyes, you just had to open up TikTok.
And as much as I kind of love the app from that perspective, I'm kind of glad it's gone too, because that could also be terrible. Like if you're doom scrolling American politics on TikTok, it really is.
But if you train the algorithm to feed you funny and creative videos along with outdoor inspiration, there's absolutely worse ways to spend an hour.
Not that most outdoor brands really understand this, because I'm not sure that most outdoor brands really understand what to do with social media in general. Back when Instagram was hitting the scene, I remember being told by someone that the brand I worked for should have an Instagram account.
And at the time I didn't know much about it. I'm like oh, why do you think we we should do that? And they didn't really have an answer.
Be beyond well, because everyone's going to have one, which is always the right, you know, that's, that's the real reason you should always do some things because everybody else is doing it. That's what my mom said. Yeah, that's. She did say that.
Over time, and probably to the detriment of what made Instagram fun to begin with, the platform became a crucial part of a brand's growth and messaging platform, which makes sense for an industry where bombastic visuals have been crucial since day one. But there are plenty of outdoor brands that still.
That still haven't cracked the nut on Instagram or, you know, which is also the best social media platform for them.
But while some level of meaningful presence on Instagram is almost a guarantee for most outdoor brands, even those with a ton of followers still didn't really have a clue with what to do on TikTok.
And so the other day, before it was taken down, I took a spin through TikTok to see which outdoor brands I could find on the app, the amount of followers they had, and then what kind of content they were posting. And I ended up looking for about 15 different brands. And some of what I found probably isn't that surprising.
The North Face had the most followers of the brands I looked for at 970,000. Patagonia checked in with 189,000.
Both of those brands posted pretty regularly, with the North Face leaning a little bit more promotional, while Patagonia posted more about their media projects. Solomon, who we talk about just all the time here on the Rock Fight, we never miss out on a Solomon story here on the Rock Fight.
They post regularly and have 276,000 followers. Anarch'teryx came in at 427,000, also posting pretty regularly.
But from there, the numbers dropped off pretty precipitously, at least of the brands that I looked at, with folks like hoka, merrell and smartwool coming in at 10,000, 9,500 and 2600 followers, respectively.
And then there are brands like Chaco, who I will happily tell anyone listening that doubted the Rock Fight's assertion that they were not in fact, a zombie brand. They didn't have a TikTok account at all. Now, of course, each. Each of these brands have a much larger base of followers on Instagram.
You know, many of them have followers in the millions.
But, and I admit I'm painting with a broad brush here, the one thing all of these names have in common is that their content on both apps, it's pretty unremarkable. It's kind of the equivalent of the ads that get inserted to your TikTok scrolling experience that you can't quite swipe past. Fast enough.
But there was one outlier in the 15 or so brands I looked at, and I'm sure that there are plenty of others as well. But I want to talk about this one as well because they're a relatively small and young outdoor brand that really seems to get it or seemed to get it.
I have to put everything in the past tense now. It's hard to do given that this just went down last night as I'm recording this.
This brand has amassed a decent followership and creates content that is entertaining to watch while also being completely supportive of their products and their brand. And there is no doubt that this is marketing, but it's not a chore to watch.
And this brand actually has again had more TikTok followers than Instagram followers, which is really rare based on what I observed doing this, going through all of these different brands. And if you're wondering who this brand is, Dave, do you want to ask me who the brand is?
Producer Dave
00:10:03.758 - 00:10:04.850
The rock fight.
Colin True
00:10:05.150 - 00:10:05.814
Yes.
Producer Dave
00:10:05.942 - 00:10:06.422
God.
Colin True
00:10:06.486 - 00:13:08.550
Why are people paying attention to what we're doing? No, it was. It's nara.
Now if you're not familiar, NARA is a women's apparel brand that started as SheFly in 2018 based on this new technology they created called the Go Fly zipper, which is in the fly of pants specifically designed for women and to enable the wearer to pee outside without needing to pull their pants down.
So now rebranded as nara, this is a growing brand, but still very much it feels like at the beginning of their run as a relevant brand in the outdoor space, you start starting to hear more and more about them in the last 12 months or so, but still relatively small compared to some of the other brands I've mentioned so far. And they are eating everyone else's lunch. Well, were eating everyone else's lunch when it comes to how they were using TikTok, their platform.
On the platform they sat at 110,000 followers. As a reminder, Hoka, the billion dollar brand had 10,000 followers.
Have to do is picture the ratio of followers to top line revenue just to see how impressive that is. Right? Someone like again, The North Face, $10 billion the North Face, 970 followers on the same platform as Nara.
The up and coming, you know, women's pant brand sitting at 110,000 followers and their videos are almost always or were almost always, you know, product or and brand based. They were fun to watch, they were engaging.
It's clear that TikTok was a strategy for them and I'm guessing they can tie their own growth to the success they're seeing in the outdoor marketplace, particularly, I'm imagining around younger consumers. And again, it really should probably be no surprise.
NARA is a modern outdoor brand that relies on innovation and solving problems the way most of the brands I mentioned earlier used to do.
That in addition to building themselves up as an apparel brand, they're treating the GoFly zipper technology as its own form of an ingredient that other brands should implement into their own products. And honestly, of course they should, because the gofly zipper isn't an outdoor story, it's a why hasn't it always been this way for women's story?
The downside of that today is that all the brands I mentioned, NARA is the only one as the only brand that I saw that will need to pivot now when it comes to their short form video strategy.
TikTok shop sales numbers aside, a lot of what I saw doing this exercise felt more akin to that early Instagram conversation I referenced with brands putting stuff on TikTok because they felt like they should and that was what was expected of them.
You know, a lot of brands in our space have such a, you know, inflated view of themselves that they're following on TikTok is due to their reputation, not because they're being thoughtful about what they're putting on there or we're putting on there.
Meanwhile, NARA is posting on the nose videos showing off how their stuff works, empowering women in the outdoors, and positioning their team in a fun and knowledgeable way. The balance they strike makes me want to watch each one, even though I absolutely am being aware that I'm being pitched on what they sell.
So I don't know why this is so hard for other outdoor brands, many of whom have a have deep pockets and could do so much more with the opportunities that exist in the outdoors to to create fun short form videos. I'm very excited to bring in producer Dave on this one because I'm sure he has lots of thoughts on social media and outdoor brands. Do you?
Eoin Comerford
00:13:08.590 - 00:13:09.650
Oh, does that mean.
Colin True
00:13:12.190 - 00:13:18.406
So Dave, what is your overall impression of how well the outdoor industry has done on social media in general?
Producer Dave
00:13:18.558 - 00:16:38.500
That's a big topic here. I'm still grieving the loss of TikTok, Colin, so I'm not really ready to make any public statements outside of that.
Just a couple things on what you were talking about though. TikTok specifically one, you know, why haven't the brands taken it more seriously over time?
I think you kind of hit on it because it's too fun, the content is too silly, it's Too fun. Way too fun. Most of these brands are so self serious that they cannot imagine them having fun.
Like why would they have fun when we can be so serious about our products that behold the outdoors. That's right. But yeah, so it's just, it's silly. It's fun. I think also too, you know again you had this medium rise up.
It was a generational divide and so they were a little slow to catch that. It wasn't immediately able to connect to sales which is probably the biggest issue of what kept these brands off of it.
There's no specific ROI ad return off of it as opposed to the brand building exercise. And you brands like NARA and you know they, they have to rely on the, on the brand building and the awareness capability and that algorithm.
Right, the algorithm, you said it's addictive. It's also the only social media platform that allows you to go viral without spending money to promote something the bigger brands.
Yeah, you can genuinely go on the basis of content and so that's really attractive to young brands, you know and as the, the shop is matured you're going to get more brands on there paying more attention to it because again they can tie it to sales. But the phenomenon Inara fits in this of the TikTok brand, right. Has definitely risen up over the last couple years.
Brands that have launched themselves on TikTok and then made the you know, kind of the extension out.
That's going to be the question is can they move and extend from this awareness generating base into a commerce base or the social commerce that you see as we start to integrate, you know, shopping into all of the platforms. Another brand that really did this well that's adjacent to the outdoors. Baboon to the moon. The bag bay. The Bag bag cargo transport company.
If you, if you haven't heard of bad boom to the moon, ask your teenage or college age daughter. All right. There's just no way that they have not.
They will, they will know and they've taken color and interesting, you know, but they started on TikTok with product reviews from people in the office.
Again that kind of peek behind the curtain aspect and really built a following on their, on their products that they were able to then extend outside of it, build up their E commerce platform and really start to create a durable business. So I think that's still the goal of that platform and that's why for that purpose I do think short form will stick around.
It might, you know, again, is it TikTok or no, I don't know. What's going to happen with that? I mean, its algorithm is particularly sexy, for sure.
But the, but the short form, it's too much of an ad centric way to deliver information, whether it be reality, rather it be produced. It just allows you to move through content constantly to keep it going.
So I just, I think the, the form is too, too important to not continue and I just, we'll see what format it does. But in terms of. Oh, go ahead.
Colin True
00:16:38.620 - 00:16:44.900
Well, as I said, do you agree with my assertion though that even like a lot of brands still are probably leveraging Instagram the right way?
Producer Dave
00:16:45.020 - 00:18:01.832
Without a doubt. Again, it goes back to that. Is it an ad or is it a conversation? Right.
Am I just going to sell you something or are we actually having conversations with our customers and our enthusiasts? Right. And so it's trying to be all things to all people.
And you know, I really cringe when I all I see from a brand on their TikTok or their Instagram feed or any is just one ad after another because then it's just, why am I even paying attention? Right. Do you have anything more to say than that? Right. So I think that's trying to figure out how you balance those types of messagings.
The, you know, it's, it goes back to the reason and the emotion. Right.
Do I have a, do I have a rational discussion with you about my price and my product features or am I having an emotional discussion about why we like to do the same things, why we're right for each other, you know, that kind of, kind of idea. So I still, it's so, such early days in terms of what we're truly calling social commerce.
I mean, you know, the whole livestream, you know, shop is the next piece that's big in China for the last few years already and just now starting to come over here and the TikTok kind of undermines that a little bit in terms of where we are, but that's not going to go away either in terms of this, this live streaming shop concept. It's going to be coming full blast here for sure.
Colin True
00:18:02.016 - 00:18:14.792
I guess last thing. So I mentioned Nara and it's impressive, but now it's a conundrum for them, right? Because they had more.
The only brand I found that had more TikTok followers than Instagram followers. If you're sitting in that chair, what do you do?
Producer Dave
00:18:14.896 - 00:18:45.720
Let's just hope they converted a lot of those to emails for their newsletter so that they can reach out specifically and talk to those folks and bring them and keep them in the fold. That's going to be the real key. Obviously, folks, too, that did try to cultivate other platforms outside of TikTok.
This is a wake up call to that, that you do have to engage.
You're always going to have your strong platform, but you just, you got to keep, you got to do the work and put that in because you just, you just never know. I mean, goodness gracious, this is a never know moment.
Colin True
00:18:48.140 - 00:19:13.152
Well, like we told you earlier, Garage Grown Gear's winter sale launches tomorrow, January 21, with a with great deals on a wide range of ultralight brands. If you're new to Garage Grow Gear, now is the perfect time to dive in.
Running through Monday the 27th, shop the sale@garagegrowngear.com Dave, I do have to ask you, I was, I was on a flight recently and I was rewatching one of my favorite movies. You know, Scott Pilgrim versus the World.
Producer Dave
00:19:13.256 - 00:19:14.272
Fantastic movie.
Colin True
00:19:14.336 - 00:19:39.780
And I had a, I, I, I'm not sure if Lloyd over at Garage Grown Gear knew that he was doing this. So this is the, here's the logo for G Man Gideon Graves. Right. That's a triple G in Scott Pilgrim versus the World. You see that?
Yes, and I think in the comic books as well. And now here's Garage Growing Gear. Look at the upper left hand side. There is Lloyd at Garage Grown Gear. Just a giant Scott Pilgrim fan.
Producer Dave
00:19:39.820 - 00:19:40.036
Oh.
Colin True
00:19:40.068 - 00:19:41.460
Is really what this comes down to?
Producer Dave
00:19:41.580 - 00:19:46.388
Maybe. So I can definitely see that. Is it kind of a hero complex?
Colin True
00:19:46.564 - 00:19:48.276
I don't know. We need to start calling him G Man.
Producer Dave
00:19:48.348 - 00:19:49.124
Oh, okay.
Colin True
00:19:49.172 - 00:19:50.292
G Man Lloyd Vogel.
Producer Dave
00:19:50.356 - 00:19:53.428
Right. I think that fits. All right.
Colin True
00:19:53.564 - 00:20:38.442
All right, let's get into our conversation with Rock Fights resident outdoor industry insider and also our consigliere, our most trusted lieutenant, Owen Comerford. All right, everyone. He joins us here every week on the Rock Fight, sometimes multiple times per week. Owen Comerford is with us.
He's our outdoor industry insider and consigliere and producer Dave, of course, is with us as well. Owen, before we get started, I do want to read to you one listener email we got after your appearance on last Wednesday's episode of the show.
And Dave, I don't know if you had a chance to hear that episode, but this is gonna shock you. This is from actually our friend Darren in the Boston area who just said the subject line is, justin sleeps with the fishes.
Eoin Comerford
00:20:38.506 - 00:20:39.258
Oh, boy.
Colin True
00:20:39.354 - 00:20:52.362
And Darren writes, justin's never seen the Godfather. What? He's required to see it and quote it by the time we get to February on the show. And I co signed that.
So yeah, Dave, Justin's never seen the Godfather.
Producer Dave
00:20:52.506 - 00:21:04.984
I did hear that, Colin. And I'm still, still recovering a little bit.
Not quite sure I'm going to bring it up if it requires a full on intervention, if this is just more of a one on one. But yeah, some things have to change.
Eoin Comerford
00:21:05.072 - 00:21:17.700
And we're going to have to go through all the guy movies and just understand where, where does Justin stand? I mean, you know, has he seen Predator? I mean if he hasn't seen Predator, I'm just, I'm, I'm out. I'm out. Can't do it. See, that's a really good point.
Colin True
00:21:18.080 - 00:21:56.042
All right, let's get into some of the stories that caught your eye over the past week, Owen. We're going to start with one that came out.
According to what looks like a leaked story in Vancouver's City News, Canadian outdoor retailer MEC has been sold or is about to be sold. We're not quite sure. Again, it's a leaked story for the second time in five years. The buyer has not yet been disclosed clearly.
Obviously we don't know the terms or if it will impact any locations for MEC that will play out over time as we learn more. This did come out. It was put in a paper. There were some rumors about it on LinkedIn.
But just assuming this is the case, let's start a little more broadly. Owen, was this new surprising to you?
Eoin Comerford
00:21:56.146 - 00:22:16.780
Yeah, a little bit. Because it is relatively recently that Kingswood Capital Management bought MEC back in 2020.
But for most private equity firms, they do look to flip these. Ideally they flip it within four to seven years. So it's not crazy that it would happen right now.
Colin True
00:22:16.890 - 00:22:20.360
So it was private equity they were sold into before, just less than five years ago.
Eoin Comerford
00:22:20.400 - 00:22:59.698
Yeah. Maybe for the benefit of our listeners, we might give a little bit of background about MEC because again, we always talk about inside baseball here.
It is kind of an inside baseball thing if you've never been to Canada.
But mec and they probably hate this, but they are known colloquially within the industry as Canada's rei and actually very accurately really until recently because A, they're an outdoor co op and B, they've been around for a while. They've been around since 1971. They were founded in Vancouver, which is just across the border from Washington. Seattle. Seattle, you guessed it.
Colin True
00:22:59.754 - 00:23:01.682
So they make their own product.
Eoin Comerford
00:23:01.786 - 00:24:01.242
They make their own product. Great. Actually some of the better private brand product I would say out there historically and a lot of it, you know, their Gear, tents, packs.
And so they definitely hold or held whatever the position within the Canadian outdoor market that Aria had and in many ways has followed a lot of the same directions strategically over the years. You know, getting a little bit more urban, maybe getting a little bit, you know, over the years.
I mean it was, it was truly for originally a co op to buy gear for people who really went outdoors and did all the things and the climbing and the whatever.
And then over the years grew to maybe being beyond the, the original ethos of the co op and selling a lot more fashion and getting into bike and run and all the things. It all sounds very familiar. I will say though, the stores are still very much more garage saley feeling. I mean they are just packed.
Colin True
00:24:01.386 - 00:24:02.618
I prefer NBC stores.
Eoin Comerford
00:24:02.634 - 00:24:08.698
They're deep and high, aren't they? They just got, it's, it's everywhere. You have to kind of move through it and see what the piles have.
Colin True
00:24:08.754 - 00:24:13.962
Well, I think there's fewer stores. I can't remember. I don't know what the current count is. There's fewer, I believe NBC stores than REI stores.
Eoin Comerford
00:24:14.026 - 00:25:18.854
Yeah, 23 stores today. Yeah, they, they had more, which a number of them were closed as part of the bankruptcy process. REI has got 187 stores, something like that.
So a little over 10% of the store footprint. But then again, Canada's about, that's sort of the ratio of Canada to America from an outdoor economy perspective. So it kind of tracks.
But yeah, so where the story Diverges was in 2019 they got into some trouble in terms of, of financials. Right. It was getting really rough. They weren't paying people, yada yada. And then really Covid was the, I guess the last nail in the coffin.
But it wasn't. I mean they weren't put out of business by Covid. Covid was just sort of the last thing. They were already in tough spot. Then they.
So they got out of business in 2020 or went bankrupt rather. And then much to the chagrin of Canadian outdoors lovers, they were bought by an American private equity firm. Firm, which is Kingswood.
Colin True
00:25:18.982 - 00:25:19.862
Salt in the wound.
Eoin Comerford
00:25:19.926 - 00:27:25.398
Yeah, exactly. So, and so they brought in some, some, some new management, closed some stores. Re going to reorganize. Some things got things rolling.
And from what I heard, things have been going okay. They've never been the fastest payer, I guess in talking to some of their vendors.
But you know, going early last year they were saying things were good.
As recently is August, one of their executives was in a magazine talking about the incredible turnaround and the work they had done on the private brand and that they made money the year before. And so it all sounded like rainbows and butterflies. But I think the reality was things were starting.
If the wheels hadn't already come off at that point, they were held on by one lug nut because they stopped paying people, people, their suppliers in right around that time, sort of August, September. And then I think maybe they got some of their fall goods but then weren't paying for them.
Also, what my sources say about the middle of last year they were already in talks to sell. And I think the thought was, well, we'll get the sale done quickly.
And so by the time we bring in a new owner with hopefully some new capital, the payment thing won't be an issue.
But it's obviously stretched out to the point where, and it's very unusual for a company that's in the middle of a sale process to go out to its suppliers and say we're for sale. Right. You don't do that because you know it's going to get leaked. Right. Especially if you send it.
You send an email out to people, that email is going to get forwarded to somebody. Right.
Because you're also sending it to people who you haven't been paying in about three to four months. Right. And so it's not like you've got all this amazing goodwill. So yeah.
So clearly things were tough and the goal with that email was to say, hey, please ship us stuff so that we can kind of keep rolling while we close this deal.
Colin True
00:27:25.534 - 00:27:33.814
So weird that a private equity company would try and pump the tires of a floundering brand in order to get it sold. That never happens.
Eoin Comerford
00:27:33.862 - 00:27:37.000
Never. Right? Never. Yeah.
Colin True
00:27:37.340 - 00:28:12.338
I guess if you look at the two maybe comps from last year between Backcountry and Eastern Mountain Sports, what path do you think is probably the most likely for someone like NBC? So backcountry kind of brought on by, for lack of a better word, maybe a tech retailer in a lot of ways. Right.
And sort of how they're going to integrate that with other sort of direct to consumer outlets there and then East Mountain Sports being taken over by a larger global retailer, downsize significantly but still trying to find the upside for that brand. Is there a model you think that based off of what you know about MEC that would maybe fit the best for them?
Eoin Comerford
00:28:12.394 - 00:29:23.360
I think they'd much prefer the EMS outcome. A deep pocketed strategic who is in retail and can bring a lot more than just dollars to the table and maybe has a Longer term vision for the brand.
And from what I'm hearing, it is a Canadian strategic. So that's sort of the. That's like check, check. That's the, that's what this is all about. Those are, that's the best options because a.
Get back to the motherland. Right. Not these effing Americans coming in here, you know. And the, the second thing is that a strategic.
So it's a strategic just sort of for our listeners. Again, the strategic means a non financial buyer. So financial buyers like a private equity firm, all they care about is the money. Money. Right.
All they care about is buying it for X and then selling it for Y. That is hopefully at least double what X was. Right. So they. All they care about is their return. Whereas a strategic is exactly that.
Usually somebody in the same industry who can then bring synergies to bear to help the overall running of the company while then also, you know, being able to extract more value from the company than just its pure assets because of what they can bring in. Synergies.
Colin True
00:29:24.500 - 00:29:25.612
More natural owner.
Eoin Comerford
00:29:25.676 - 00:29:40.460
Exactly.
And usually longer term like strategics don't buy companies to flip them typically they buy them to build them and to build them as part of their core. So yeah. So all of that is good. Assuming this thing actually happens, was there.
Producer Dave
00:29:40.500 - 00:29:48.156
Ever any kind of realistic synergy between them and the actual rei would have that ever been considered. Considered?
Eoin Comerford
00:29:48.348 - 00:30:41.696
It's a great question. My. My understanding that this is not official, but my understanding was that there was sort of a.
Not to be sexist, but gentleman's agreement that, that they could. That they would coexist on either sides of the border, I. E. That REI would not, you know, expand into Canada and vice versa.
So that, that I believe that was the. The extent of it.
Interestingly, an svp, the chief merchant from rei, actually left REI this year and went to MEC as their chief merchant, which I thought was like that's interesting. Now he, I guess he is a. He is a Canadian, so it was sort of a homecoming for him.
But to move from, you know, the 800 prime gorilla to a 200 prime gorilla is an interesting move.
Colin True
00:30:41.768 - 00:30:44.992
So do we want to. Dave, should we just tell everybody that it's us?
Producer Dave
00:30:45.176 - 00:30:46.768
That's right. That's right.
Colin True
00:30:46.824 - 00:30:47.984
We just want to announce it today.
Producer Dave
00:30:48.072 - 00:30:51.220
The Rock Fight is Rock Fight's acquiring fec.
Eoin Comerford
00:30:52.040 - 00:30:57.264
If that's the case, I'm out. I mean, I've sworn off retail. No, thank you.
Colin True
00:30:57.432 - 00:31:39.980
Well, speaking of some retailers who maybe need to be worried because Owen's swearing off of Retail There was a recent article on retaildive.com that where several notable outdoor and sporting goods retailers potentially have the potential to file for bankruptcy in 2025. Per that article, Retail Dive tracked close to 20 notable bankruptcies in 2024.
And on their list for who could file in 2025 include notable names such as Big 5 Sporting Goods and the aforementioned Backcountry. Also on the list are folks like the Walking Company and fanatics.
Every year the industry, we see a handful of brands or retailers either flirting with or going through bankruptcy, I guess. Owen, what's notable about the names you're seeing on this list?
Eoin Comerford
00:31:40.510 - 00:34:52.467
And I guess they're not surprising but certainly intriguing as to because just so that everyone understands the way that the lists are compiled, it's based upon these companies that do these risk assessments based upon credit worthiness and results and all these other things, how late they are with payments, et cetera. And so they came up with a score and that score is then what drives these lists.
So it isn't just some journalist picking names out of a hat or hearsay. It's based on actual numbers and data. So I think that puts a little bit more behind it when I look at, I mean, backcountry is super interesting.
Obviously it had a couple of tough years.
From everything I've heard, sales are off 30 or 40% from their high and they definitely had had some payment issues before the deal, not unlike the MEC deal, if I have to guess.
They faced the same issue that backcountry faced for mec, which is that their line of credit was pulled because they didn't meet some covenant in the banking agreement. And then their sponsor, their financial sponsor said, well, we're not covering it, so you've got to kind of figure it out while we sell you.
So some of this could be a hangover from that in terms of the prior people not paying. And so that might be figuring into this score. So we don't know.
I'd be interested to hear maybe offline from folks how things have been from a payment perspective since the acquisition. So what's in the sort of anti column of I don't think it's going to happen? Column one is they've been.
Well, the first one is that you don't typically buy a company to run into bankruptcy. You typically buy a company a year later. Csc, they're operators, they've done this a number of times.
They know what they're doing, so they wouldn't just do this and like, oh shit, oh What? We don't have enough money. Oops. So that would be probably the biggest reason why I don't think it's going to happen.
Secondly, they've been pretty aggressive in terms of layoffs, unfortunately, obviously for the backcountry employees, but they've been cutting and cutting and cutting.
The third reason that I would say it's unlikely is because they've attacked probably the biggest source of some of their cash flow issues, which was their private brand. They just bought way too much. Private brand, couldn't sell through it.
And the cash flow to run a private brand is way different than the cash flow of buying goods where you're getting terms, it's a different deal.
So for all of those, and oh, by the way, I think the industry's getting healthier and hopefully, fingers crossed, we'll be healthier this year, which should again help. So for all of those reasons, I would say not going to happen.
Now on the it might happen side of things, one is they were discounting like crazy this fall, right? I think we talked about that on a prior show.
Colin True
00:34:52.523 - 00:34:53.523
How many emails did you receive?
Eoin Comerford
00:34:53.571 - 00:36:14.966
Oh my gosh, it was like every week they had a new 20 off coupon. Now was that desperation? Was that just new management not really caring about what the industry thinks is a map policy? Just purge, purge?
So hard to say on that front, but the one that really kind of has me a little concerned is the fact that they revealed that they closed on $112 million debt facility. So this was a classic LBO leveraged buyout where to buy the company, they take out a large term loan to help fund the purchase price.
But now that the company is sort of buried in debt, so not only do they have to obviously perform and generate cash just for the overall operation of the business, they also have to fund all these loan payments. So that piece is like, hmm, that's a little concerning.
But again, typically a company, the people that make those loans don't make them to people who they think are going to go bankrupt because they're the ones ultimately they get left holding the bag. So overall I would say I don't think it's going to happen, but it wouldn't be totally shocking if it did.
Colin True
00:36:15.118 - 00:36:16.370
What about Big Five?
Eoin Comerford
00:36:17.390 - 00:37:20.178
Big Five is actually it's a public company company, you can go out and look at their financials. So there's a lot more you can do there. And actually one of the things you can do is you can.
So there was a score obviously for them on this, in this article, they were a 1 on a scale of 1 to 1 to 10. Whereas 10 is the most healthy one. The least. So yeah, not great. Also, there is a scoring system called the Altman Z score.
You want to get super geeky here? Okay, we're getting ready. So there's this Altman Z score, which it isn't a perfect rating for Reading Retail companies.
It's really more built for manufacturing, but it is comparatively, it's interesting because it rates things like working capital and all these financial aspects of a company. A score above 3 is considered healthy. Fine. Okay. You're great. A score below a 1.8 is like, oof. Like yikes. Right?
So as a comparison, Dick's Sporting Goods is a 4.4. Okay, great. Right?
Colin True
00:37:20.234 - 00:37:20.882
Pretty good.
Eoin Comerford
00:37:20.986 - 00:37:24.990
Academy is a 3.02. Solid. Not bad.
Colin True
00:37:25.290 - 00:37:28.750
They're there. Just over, just over the line, but they're there.
Eoin Comerford
00:37:29.050 - 00:37:33.330
But big five is a 1.57, so it's below the 1.8.
Colin True
00:37:33.450 - 00:37:34.562
So they're on the wolf.
Eoin Comerford
00:37:34.626 - 00:38:23.792
They're definitely at the wolf end of the scale. Yeah. And so they just released their preliminary results for 2024 sales of 796 million, which was a comp of minus 9.4%.
So they continue to go down and down and they're forecasting losses, if I did my loss per share calculation correctly, of about 70 million, which is oof. Considering the loss last year was only 7 million and the year before that they made 26 million. So definitely going. Yeah, wrong direction.
So their debt level isn't too bad, but they. And actually their facility was just renewed. So again, you would think, you know, the bankers should know what's going on here more than we do.
So that would tell you that probably they're okay, but not moving in the right direction. Definitely.
Colin True
00:38:23.936 - 00:39:17.928
Dave, what do you do with a. With a big five? Right, Because I just.
And all of this, you know, it may not have any bearing on it whatsoever, but it's saying even as a shopping experience, I genuinely do not like going in their stores. Like, I'm not trying to be like, you know, like pile onto the company that might file for bankruptcy, but if I have to, I walk into a dick.
So like, hey, it's great. I know what I'm doing. I shop around. It's got a nice, nice flow to it. That's assorted. Well, if it's a well maintained store, it's a pot.
It's a pleasant shopping experience. You know, rei, we give. Might give them grief versus a specialty store, but you walk in and it feels like an outdoor store, right?
You're like, okay, great. There's climbing stuff and ski stuff. And if you're kind of a geek for that stuff, there's stuff to look at.
Big five is kind of a sporting goods comp, I guess, to like Walmart, where you walk in like, I gotta get what I need. I gotta get the hell out of here. Like, it just. There's not a fun place to go. And I'm not saying that that would turn this around.
I just made me think of it when Owen was describing it of like, God, all of this and I don't even want to walk in your store.
Eoin Comerford
00:39:18.024 - 00:39:44.116
Well, you said, you know, what would you do other than actively merchandise your stores in a way that repels people, Right? I guess. I mean, that's what you're talking about. You look @ Dick's in REI and yeah, they've made an experience in a big box way.
They've made an experience that's still pleasing. I can find what I'm looking for. It all goes together. I mean, look at.
Even in that case, Walmart at least puts things together where I know where they are if I'm in there, you know, it's massive.
Colin True
00:39:44.228 - 00:39:45.364
There are the groceries.
Eoin Comerford
00:39:45.492 - 00:39:53.316
But to your point, Big 5 has never been comfortable. It's always been, no, why am I here and what can I do to get out of it?
Colin True
00:39:53.468 - 00:39:56.708
I really need golf balls, but I might get stabbed. I'm not sure what'll.
Producer Dave
00:39:56.884 - 00:41:28.776
It's all just, it's just very dated and tired. I mean, even the logo looks dated and tired. It really does.
And I think they're stuck in a situation where, you know, realistically they need to invest in their store experience in a big way to compete with the, with the Dicks of the world, right. And then to attract the brands that they need to attract.
Like they don't have Nike, they don't have, you know, Brooks and, you know, or whatever on running and Hoka. I mean, they just don't have the big guys. So. But when you're in this cash crunch, it's like, well, well, we're in this crunch.
We can't spend 50 million on story models. So it's a tough spot.
I would say, even though that might be the step that you need to actually turn around. And to that though, I would say their answer is not to try to be dicks. What can you do in their space?
I mean, to me there is a unique way to have a utilitarian space that's still valued. This idea of minimalism. Let's say and kind of frugality. They're trying to really bare bones it.
You could still do that in a way that's cool, in a way that has you go in and feel that as a consumer, oh, this is why I'm in this environment because it's providing me more value than what I could get. And they're not spending it on kind of puffery, if you will. But they don't even do that though. I mean it's, I think, and I think it's more of a.
We're trying to, trying to kick you out about go away.
Colin True
00:41:28.848 - 00:41:52.152
I just, there's, there's just such a long history, like the road is just littered with the, the retailers of the past who never quite learned some of these lessons.
And I don't want to oversimplify it and I don't know the ins and outs of it, but it just, you look at, go back to models and even the conversation we just had about an REI like you, you see where the upside of some of these brands or what they could do to kind of turn things around and boy, man, it's just a rough creativity.
Eoin Comerford
00:41:52.216 - 00:42:13.100
It's a lack of just kind of vision of what you can do with what you have.
It's, it's an old school company. I mean they've been around for a long time. Either executive, their executive team, I think has been in, in their roles for the last 40 years.
I mean it's, yeah, it's, it, it needs an injection of totally. Yeah, absolutely.
Producer Dave
00:42:13.440 - 00:42:21.522
And if Justin had seen the Godfather, we could make a connection to the five families of Big five and bring everyone together to figure out how to charge.
Eoin Comerford
00:42:21.666 - 00:42:22.802
You can't do that.
Colin True
00:42:22.986 - 00:42:46.058
God damn it, Houseman.
Well, I guess the last thing on this, Owen, like, you know, you know, does any of this stuff that we're talking about between mec, even that we talked about last week with Justin, about REI shutting down experiences, these rumored bankruptcies. Is this any of this a sign that maybe we shouldn't feel as rosy about 2025? We keep saying, oh, we're entering a healthier period.
Is this, are these individual issues or are these industry issues issues?
Eoin Comerford
00:42:46.194 - 00:43:45.660
Well, I mean, they're definitely industry issues. Oh yeah.
I mean, we've had a tough, tough two years where so much of it is inventory is generally what kills retail companies typically is where the inventory and the payments are out of whack with the demand. And so yeah, we've had some tough times and we've seen it in the cycling industry.
There's more to come, I think on the cycling and kayak side next year, it's still tough going there. I just do think that we're coming out of this this year a little bit.
And then there are less players, less EMS stores, less Moose Jaw stores, less public land stores. So there are less people maybe chasing the demand, which may help things too.
But no, this is a major, these last couple years have been a major upheaval within the industry.
Colin True
00:43:46.240 - 00:44:00.760
All right, well, as always, you can follow owen over on LinkedIn and you should follow Owen on LinkedIn. If you're not on LinkedIn, get on LinkedIn so you can follow Owen's observations and posts.
They're always, the comments of his posts are always a fun time over there on a weekly basis and learn things.
Producer Dave
00:44:00.800 - 00:44:04.008
Like the Z score, right? The Altman Z Score.
Eoin Comerford
00:44:04.104 - 00:44:11.238
Yeah, you can, you can pull that, pull that out of your next cocktail party, Dave. And they're Altman Z score anyway.
Colin True
00:44:11.264 - 00:44:18.154
But yeah, follow Owen over there. Thanks again for coming on, buddy. I guess we'll see you back here next week with more insights into the outdoor industry.
Eoin Comerford
00:44:18.322 - 00:44:20.230
Absolutely. Wouldn't miss it.
Producer Dave
00:44:24.450 - 00:44:26.830
It's time for a body shot.
Colin True
00:44:27.810 - 00:44:45.310
All right, lastly today, guys, our parting shot is going to be sonically driven. Our impending AI Overlord Sinet and his house band caught wind of our bankruptcy topic today with Owen and he came up. Excuse me.
They came up with this little Disc City, so please enjoy. Gone, gone, gone.
Producer Dave
00:44:53.090 - 00:45:31.710
We knew you now you're gone. Does this mean I can't return the thong?
No fluorescent lights and messy shelves felt like a sail And Dante's Hell's from the Mountain to the sea Another big box bankruptcy. Gone, gone, gone, gone, gone. Maybe we'll miss you, maybe not. Or maybe just miss all the stuff we bought. Gone, gone wrong.
Colin True
00:45:39.980 - 00:46:30.038
All right, well, we can wrap it up there, guys.
Come back on Wednesday to hear Justin Hausman and I run through outdoor adventure headlines and on Friday, come back for make plus Equal founder Andrea Kelly. Check out the latest from the Rock Fight Podcast network. Open container drops live on Tuesday the 21st, potentially by the time you hear this.
It's also available. So find that on your favorite podcast app and listen to Doug Schnitzbahn and his new show that we are producing.
We want your emails, we want your feedback. Send them to myrockflightmail.com the Rock Fight is a production of Rock Fight LLC. Our producer today is producer David Karstadt.
Art direction provided by Sarah. Just over here cleaning up your shit. Gensert for Owen Comerford. I'M Colin True. Thanks for listening. And he's here to take us out.
It's Chris Demai with the Rock Fight Fight song. We'll see you next time, Rock fighters.
Producer Dave
00:46:30.134 - 00:47:30.220
Rock fight. Rock fight. Rock fight. Rock fight. Rock fight, Rock fight.
Welcome to the rock fight where we speak our truth Slay sacred cows and sometimes agree to disagree.
We talk about human powered outdoor activities Then pick fights about topics that we find interesting like pop culture music, the latest movie reviews, Ideas that aim for the head. This is where we speak our truth. This is where we speak our truth. Rock fight, Rock fight, Rock flight welcome to the rock flight.
Rock fight, Rock flight Welcome to the rock flight Rock flight, Rock flight, Rock fight, Rock fight, Rock fight. Welcome to the rock fight. Rock fight, Rock fight, Rock fight.