Thread: Oregon sporting good chain goes under

Although this is sort of sad, always is when a local based chain goes under in this way (a piece of local history gets lost), this is just one of many larger businesses losing the financial battle lately. It would seem that our sagging economy is purging itself of stores that simply cannot, or will not, compete (their prices were far above average, and were being beaten out by Walmart and Big Five in our area). Maybe this is needed in our nation, to cut back on the amount of big stores out there and swing back to smaller local stores (Walmart and Big Five are not), which really are the ones that make our local economies thrive

http://www.oregonlive.com/business/inde ... oes_1.html

$61 million buys Joe's; big clean-out sale begins
by Laura Gunderson, The Oregonian
Thursday April 09, 2009, 8:22 PM

Jamie Francis/The Oregonian An anniversary sale was in swing at the Joe's on North Hayden Meadows Drive in Portland, even as the chain's demise was being cemented Thursday in a Delaware bankruptcy court. The sale of its assets begins today as it prepares to end a 57-year run.

A little more than a month after filing for bankruptcy, G.I. Joe's Holding Corp. was sold to a liquidator Thursday for $61 million -- less than half the value of the goods on the Wilsonville-based company's shelves.

By June 30, Joe's stores are expected to be picked over, cleaned out and locked up.

Boston-based liquidator Gordon Brothers Group will launch going-out-of-business sales today at Joe's 31 locations. Gordon Brothers, in partnership with a private investment firm, beat out two other liquidators angling for Joe's, which failed to attract a bid from anyone interested in continuing to operate the 57-year-old chain.

Joe's Sports couldn't avoid liquidation
The liquidation, tentatively approved Thursday by a federal bankruptcy judge in Delaware, brings an end to one of Oregon's larger and most storied retail chains. It got its start in the trunk of founder Ed Orkney's car before moving into a tent on North Vancouver Avenue -- familiar tales to longtime Portlanders. Joe's lineup shifted through the years from Army surplus and camping supplies to a mix of automotive parts, fishing and hunting gear, and sporting goods.

Joe's "always knew it could come to this," Paul Possinger, a Chicago-based lawyer retained by Joe's, told the judge at Thursday's sale hearing.

"It always hoped that some portion of the business could survive and that layoffs could be minimized. Unfortunately, it didn't work out that way," he said. "There are just insufficient sources of capital out there."

The sale puts about 1,600 employees across three states in limbo. Some will stay on in stores to help clear merchandise, while staffers at the Wilsonville headquarters have already sought help filing for unemployment benefits.

"Virtually all of my associates are saying that they just appreciate the customers who are coming in and telling them how much they've appreciated the store, being a part of all this and that they're really unhappy to see all this happening," said Ken Lund, manager of Joe's Salem store. "That's what's keeping people going and making a difference, especially at this tough time."

Joe's received bids from two other liquidators, Great American Group and Hilco Merchant Resources, but opted for Gordon Brothers after a two-hour, five-round bidding war between Gordon and Hilco when the retailer was auctioned earlier this week. Gordon's bid before the auction equaled 46.3 percent of Joe's inventory, valued at $128.5 million retail.

After Tuesday's auction, its bid swelled to 49.05 percent -- minus some money for defective merchandise -- or around $61 million.

Some creditors criticized Gordon Brothers' partnership with Crystal Capital Management, which provided financing to the retailer after it filed for Chapter 11 bankruptcy protection March 4. Joe's lawyers argued that negotiations were kept at "arm's length" and that the bidding war shows the bid and the ultimate agreement were fair.

Gordon Brothers has cleared goods for several retailers that have struggled in recent years, including bankrupt consumer electronics chain Circuit City and Macy's, which closed 80 of its department stores last year.

As with other liquidations, Gordon Brothers' task is to quickly sell off inventory, clean out stores and hand keys back to landlords. In Joe's case, if sales exceed $61 million, the retailer and the liquidator will split the profits, up to a cap of 1.5 percent of the $128.5 million, according to the court hearing.

Once that cap is reached, additional proceeds will be divvied up with 80 percent going to Joe's and 20 percent to the liquidator.

The deal provides Joe's with $48 million today and the remainder once sales are complete. Through the going-out-of-business sales, Gordon and Crystal Capital will cover some rent payments, payroll, employee benefits and overhead at the Wilsonville headquarters, which was capped at $35,000 for the first month and $25,000 a month thereafter.

U.S. Bankruptcy Judge Kevin Gross approved the sale on the condition that Joe's representatives settle a few outstanding issues with landlords and a specific creditor. If those conditions are not met, Gross warned, he reserved the right to halt the going-out-of-business sales.

San Francisco-based private equity firm Gryphon Investors bought G.I. Joe's in 2007 for about $50 million. Soon after, stores dropped "G.I." to be named simply Joe's. When Joe's announced its bankruptcy filing, Gryphon said it had invested more money into the chain as the economy worsened in 2008 and had hoped -- but failed -- to secure more financing.

-- Laura Gunderson; lauragunderson@news.oregonian.com

As someone that lived in a small East Texas town, I say no more big box stores in Rural America. I saw first hand this town get destroyed after Wal Mart came to town. The downtown area used to be thriving. Now, it is just another American ghost town brought on by the greed of corporate America.

I really think that the big box stores have taken something from us. I prefer a smaller store, with just a specific line of products, and the person running it, you know. We try to frequent those stores over the big ones. Plus, the conversation is nice and helpful.

Joe's (formerly GI Joes) was just too darn expensive for me. Most everything they sold could be bought elsewhere for less. Although they did have a really vast selection.

CaptainRon, there is still the place called "Sportsmans Warehouse". We just found out about this one and it looks large. There is one on 82nd I was told, and plan to go look one of these days.

We bought two tents at Big Five, for under $30.00 each. The first one we bought, we read on the label would fit 4 people. So we were excited, and took it home. We went to camp out in the Umatilla National Forest, in the Blue Mountains, and found, NO, it does not really fit 4 people, comfortably (well, if they are small people it would). LOL.....So we had to get another one.

Sad to see a local company go out of business, but yes, they were just too expensive, unless you were a D.I.N.K., outdoorsy type.