On Tuesday, Oct. 7, Marin Outdoors shuttered the company's Napa and Santa Rosa, Calif., locations, and turned the San Rafael store into liquidation central. After 55 years of serving North Bay customers, Marin Outdoors is going out of business.
Founded in 1946 as a surplus store, the retailer expanded and began offering high-end specialty gear and apparel for camping, climbing, travel and boating. The troubles began in 1997, when the store was forced to file for Chapter 11 bankruptcy protection. Although Marin Outdoors exited bankruptcy one year later, the company never fully recovered despite turning a profit every year since.
Why? The short answer is no bank backing. The long answer is the economy, combined with increased competition and world events that created an environment that proved too challenging for Marin Outdoors to survive in.
According to company President Stephen Seikel, he knew he would have to secure capital to continue to operate the company after the unsecured loan and creditors were paid off.
"We paid back almost $2 million in debt to our creditors within the first year," Seikel told SNEWS. "But despite that and the fact we have been profitable every year since the bankruptcy, we have been unable to secure the necessary capital to keep the company operating."
The slide started with the entrance of REI to the San Rafael market. Insiders told SNEWS that Marin Outdoors sales in the San Rafael store, which accounted for nearly 60 percent of the three-store chain's revenue, dropped 20 percent. While most stores nationwide realize an average recovery of 10 percent to 11 percent after the entry of an REI or other competitor, sales never came back for the store, in large part because of the economy and the tragedy of Sept. 11.
Sales for the company plummeted from a high of $11.5 million in 2000 to sales of just $9 million in 2003. Seikel estimates the company lost $1 million in lost travel-related sales alone.
According to Seikel, he did just about everything, including talking to folks that would make Tony Soprano look like a choir boy, to secure funding, but no one would step forward. Seikel and his wife even refinanced their house to provide an extra injection of cash, but to no avail.
After exhausting almost every alternative, including shutting one or two of the stores to keep the company running, Seikel and his staff came to the conclusion there was no way out, and that closing the doors would be the only solution.
SNEWS View: This is very painful for Seikel and his staff to be sure. Many of the staff have worked at Marin Outdoors for 15 to 30 years. That's a lot of history to lose. While there may yet be another chapter to add, it will not carry the Marin Outdoors name. We know of at least two retail companies still sniffing around the dying store, perhaps trying to decide if one or more of the locations are worth having before the vultures move in. Unfortunately, this scenario is bound to be more common in the next year as retailers who are currently clinging to life support, and retailers who should be dead but just haven't admitted it yet, shut their doors or get swallowed up through an acquisition by a competitor. Darwinian economics can be very harsh. And perhaps this is why Marin could not secure financing. Several investor experts we spoke with told us the market is oversaturated with retail and few banks are willing to give money to any retailer simply seeking to stay alive.