Dive Brief:
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Outdoor retailer Bass Pro Shops is working with Goldman Sachs Group’s private equity unit to bid on rival Cabela's, sources have told Reuters.
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Family-owned, publicly held outdoor gear and apparel retailer Cabela’s is under pressure from one of its investors to be sold, and Reuters first reported in November that Bass Pro Shops was interested.
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Although many private equity firms have balked at investments in retailers that, like Cabela’s and Bass Pro Shops, sell firearms, Goldman approaches private equity investors on a deal-by-deal basis, so investors can easily opt out because they’re not tied to a fund.
Dive Insight:
There’s a lot of overlap in these two companies—both are known for their big, destination-like stores focusing on all things outdoors. Cabela’s stores feature taxidermy, shooting galleries, and other tourist attractions, amenities that can attract shoppers that might otherwise turn to e-commerce for their purchases. Bass Pro Shops in some stores runs wild game and fish restaurants, and both operate locations in the U.S. and Canada. Cabela’s also runs a lucrative credit-card business that it is also considering selling.
But Cabela’s has been struggling of late. It is scaling back its expansion plans after discovering that its new superstores are taking sales from smaller existing ones, with same-store sales falling 4.2% and profit dropping 19% in the most recent quarter.
Cabela's investor Elliott Management last year disclosed an 11% stake in the company and is said to be urging a sale or other ways to unlock value in the beleaguered retailer, including a real estate sale or spin-off of its credit-card business.
The retailer's founding Cabela family still retains a 24% stake in the company, which could cause a kink in Elliott's reported plans for a sale if their opinions do not match with the firm's. Bass Pro Shops' work with Goldman, however, likely gives it the financing it needs to pursue an acquisition of Cabela's and the efficiencies and synergies that would bring.
