Dive Brief:
- The Modell's Sporting Goods brand sold last week to Retail Ecommerce Ventures (REV), which bought the the Dressbarn brand in 2019 and the Pier 1 brand out of bankruptcy this year.
- The sale of Modell's intellectual property topped $3.6 million. Assets include Modell's trademarks, domain names, a customer database with some 5.6 million files in it, and the "Gotta Go to Mo's" jingle, according to an emailed press release and court filings.
- Modell's filed for bankruptcy in March and moved to liquidate its store base of 134 locations.
Dive Insight:
Prior to its bankruptcy, Modell's neared a plan to close a modest number of stores and sell itself to a third party. Those plans, unfortunately, didn't work out. Instead, the sporting goods retailer, which traces its history back to 1889, filed for bankruptcy just as COVID-19 was making its impact felt on the retail world.
The retailer, centered largely around New York, had been struggling for some time leading up to its bankruptcy. In March 2019, The Wall Street Journal reported Modell's had hired restructuring advisers, often a signal of deepening financial distress, with bankruptcy among the options being considered.
Court documents showed it had been working with restructuring advisers as far back as 2017 after competition from big-box and online players cut into its sales. But as late as February of this year, the CEO told Retail Dive that bankruptcy was not on the table.
During much of the past two years, Modell's sought a suitor with help from its advisers. Failure to find a buyer sent the retailer into liquidation. And so Modell's joins the ranks of retail brands to find a second life after liquidation, snapped up by one of a strengthening class of brand holding companies and e-commerce specialists.
REV says its brands have generated more than $1 billion in sales since its founding in 2019 by Alex Mehr and Tai Lopez, who have backgrounds in digital marketing with YouTube and Facebook. Its goal, as it eyes more distressed retail brands, is to "create thriving online stores where physical-first operations previously failed."
One of their acquisitions, Dressbarn, bought from Ascena outside of bankruptcy last year, has grown revenue 165% quarter over quarter since REV bought it and relaunched it online, according to the company.
Brand accumulators like REV have been growing in an age of retail distress. Among the largest and most aggressive is Authentic Brands Group, which has recently teamed up with mall REIT Simon Property Group to buy Brooks Brothers and Lucky Brands. Among other acquisitions, Authentic Brands also snapped up the beloved Barneys brand out of bankruptcy last year. The model allows the brand owners to keep their balance sheets light on assets as well as liabilities like store leases, making for large margins and less risk.
