The buyout follows a pattern at brick-and-mortar stores, while forming a retail giant.
Bass Pro Shops announced plans today to purchase Cabela’s for $5.5 billion, forming an outdoor retail giant dwarfing any other in North America.
The merger will create a general outdoor, hunting, fishing and watersports retailer with an annual revenue of nearly $8 billion.
Cabela’s is continuing a pattern that’s been repeated throughout the industry’s other big-box and brick-and-mortar stores. The brand has struggled in recent years to keep up with Amazon and other online retailers and was ranked by Forbes as the chain most likely to follow in the footsteps of RadioShack, which had just declared bankruptcy and shuttered 1,100 stores.
Earlier this year, Sports Authority also filed for Chapter 11 bankruptcy and liquidated completely. Not long after, the owner of Eastern Mountain Sports and Sport Chalet declared Chapter 11 and closed all its Sport Chalet stores, as well as a few EMS locations.
As revenue and profits waned in the last year, one of Cabela’s primary investors began advocating for a sale, which the company started considering following a disappointing last fall. The company’s board of directors approved the buyout, which is set to complete in 2017.
Despite its problems, Cabela’s still sat with Bass Pro Shops as one of the largest outdoor retailers in the country, with revenues of $4 billion and $4.2 billion, respectively, in 2015. Compared to their soon-to-be combined profits, REI only made around $2.2 billion the same year.
According to a statement released jointly by the two companies, “A driving force behind this agreement is the highly complementary business philosophies, product offerings, expertise and geographic footprints of the two businesses.” Both brands focus heavily on hunting, fishing, boating and other non-technical modes of outdoor recreation, and both have an established and loyal customer base. Along with increasing efficiency and strength dealing with their declining retail model, the combination of the brands creates a powerful force in the industry.
For the time being, at least, Cabela’s will live on as its own brand with new ownership.