West Marine files for bankruptcy, Rocky Brands and Luxottica among top creditors

The bankruptcy filing of US boating retailer West Marine, which recently sought Chapter 11 protection, has implicated several apparel companies. Rocky Brands, Kent Water Sports LLC, and Luxottica of America are listed among the retailer's top 30 unsecured creditors. Other brands sold by West Marine, such as Sperry, are reported to be less affected by the proceedings.

West Marine filed its Chapter 11 petition with Delaware's US Bankruptcy Court, listing both estimated assets and estimated liabilities in the range of 500 million dollars to one billion dollars. The company has entered into a restructuring agreement with backing from key financial stakeholders to pursue a transaction that intends to enable the delivery of its capital structure “while maximising value and ensuring continued service to the boating community”.

The total number of creditors listed surpassed 100,000, with Rocky Brands US LLC, which sells its Xtratuf boots through West Marine, emerging in the upper portion of impacted unsecured creditors. According to the filing, the group is owed 1.1 million dollars, while Kent Water Sports, the parent company of footwear brand Ho Sports, is owed nearly 1.17 million dollars and sunglasses brand Luxottica is owed over 900,000 dollars.

Mounting annual lease obligations exceeding 50 million dollars were cited by West Marine CEO Paulee Day as the primary reason for the bankruptcy filing. “Many of the debtors’ stores are burdened by undesirable locations, onerous lease terms negotiated during more favourable economic conditions, and limited flexibility for early termination, leaving the debits with little ability to right-size their portfolio outside of a court-supervised process,” Day said.

She continued: “The fixed costs associated with maintaining this excess retail presence—including rent, utilities, and allocated overhead—have consistently consumed a disproportionate share of the debtors’ operating cash flow, eroding margins and preventing the business from investing in the operational improvements necessary to restore long-term profitability.”

West Marine, which operates 200 retail locations, has appointed Hilco Real Estate to advise on potential lease saving areas, and oversee the wind down of stores that do not align with the company’s go-forward footprint. Day said the actions taken “will allow us to optimise our operations and rationalise our footprint, so that we can focus on continuing to serve our customers and community well into the future”.