"Backcountry" Sold in a Near-Bankruptcy Exit...

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Author: Eoin Comerford, Industry expert...

According to Pulse Ratings Inc., Backcountry (BC) has been sold to CSC Generation, a roll-up of distressed retailers like Sur La Table, One Kings Lane and more. The transaction took place in August but has been kept very quiet. In fact, the first outdoor media to cover the story was the Rock Fight Podcast with Colin True.

Prior to 2019, BC had used its online leadership and gearhead strategy to drive $1B in revenue and private equity owner TSG Consumer Partners was asking for close to 1X revenue from potential acquirers. Fast forward five years and, after selling off valuable European subsidiary Bergfreunde to DECATHLON FRANCE late last year, TSG has ultimately sold off the remaining BC assets for pennies on the dollar and a fraction of its $350M purchase price back in 2015.

So what happened? Ultimately, BC fell victim to many of the same challenges facing the whole outdoor industry, combined with the ecommerce profitability squeeze created by ever-increasing marketing and shipping costs… challenges with which I can certainly sympathize.

But the key issue was that TSG wanted BC to follow the playbook that drove the success of its other big ecommerce investment: REVOLVE, i.e., use fast fashion techniques to build out multiple private brands that sell at high margins. The private brand strategy led to a number of self-inflicted wounds:
1) In 2019, to protect the core Backcountry private brand, BC decided to sue any small outdoor brands and retailers that had “backcountry” in their name. This drew huge consumer backlash and lead to the firing of the CEO.
2) The fast fashion launch of multiple private label brands (Backcountry, Basin & Range, Stoic) drove very wide assortments but poor customer reviews for fit and quality. Ultimately, much of the line had to be liquidated at 60-80% off.
3) To drive sales of the private brands, BC embarked on a physical retail roll-out in expensive, glitzy retail developments like The Grove in Los Angeles or Stanford Shopping Center in Palo Alto, CA. Merchandised like outdoor boutiques, the stores were primarily filled with BC’s own brands with just enough other brands and gear sprinkled in for a little "authenticity".
4) In another effort to drive sales, BC attempted to sell its brands to other retailers, taking out a booth at Outdoor Retailer. I’m not sure if they made any sales but the general industry reaction was not positive.

It will be interesting to see where CSC Generation takes Backcountry. Continue to lean into the private brand and physical retail strategy or go back to the gearhead roots that made BC such a staunch competitor back in the day?

There are a lot of really fine outdoor lovers that work for Backcountry. For their sake, and the sake of the overall industry, I hope that the new ownership can return BC to better, healthier place.

[unterhausen]

I bought something from BC once, in 2018 I think. They were very tolerant of a mistake I made. Haven't had a need to order anything since, so I lost track of them. I only vaguely remember them suing people, which would definitely have me looking elsewhere for my purchases.

[prototoast]

Originally Posted by unterhausen

I bought something from BC once, in 2018 I think. They were very tolerant of a mistake I made. Haven't had a need to order anything since, so I lost track of them. I only vaguely remember them suing people, which would definitely have me looking elsewhere for my purchases.

Backcountry owns Competitive Cyclist, which is a place many more of us have likely purchased from.

[.RJ]

has private equity ever done anything good for a company

[EB]

The impending chapter 11 was in the bike shop rumor mill as far back as February.

As of today you can still buy from competitive cyclist and backcountry (which also share an inventory system, I think). Some kind of flash sale going on. Tough times out there for ecommerce retailers that aren't named Amazon.

[klink]

Ordered a pair of R8000 hydraulic calipers from them a couple years back. Box included a bonus XX1 cassette. Was pretty happy about that. But doubt it's good for business.

[djg21]

TSG Consumer Partners also owns or owned CompetitiveCyclist.com. It owned a stake in Canyon Bicycles, and Nuun Nutrition, among other things.

[jds108]

Interesting, thanks for posting! I'm in Bozeman and we have a BC retail store here. Nice, clean, well laid out, fully stocked. But every time I've been there, it's been almost devoid of customers. I'd be shocked to hear that store turns a profit.

[Tickdoc]

Originally Posted by .RJ

has private equity ever done anything good for a company

Imma say no. In my industry, Private equity allows the owners a fast exit, while eroding what made most of these companies great to begin with.

It's a cancer of democracy, IMO.

[ap_az]

I've spent quite a bit of money with BC and CC over the past 5 years, but as they evolved my spend went down. I always appreciated that they held a reasonably deep inventory and staff who were somewhat knowledgeable if I ever needed a question answered.

In the past year or so the quality of the staff knowledge has dropped a lot and their level of empowerment took a dive as well. In the end I just don't see a solid value proposition for the consumer so they don't get much of my money.

It's sad as if they hadn't gone down the growth at all costs route then they would likely still be thriving. They'd certainly be worth more money than they are now.

[redir]

I remember that causing a huge stir in my little Virginia town when Backcountry distribution center moved in. We had this little shop called Backcountry Ski and Sports in town since, I think, the 1980's and they closed down shortly after. Never bought anything from them because of it, even if it really wasn't related. They were bullies and no one like a bully.

[C40_guy]

Originally Posted by .RJ

has private equity ever done anything good for a company

PE just did a particularly nasty job on a group of hospitals in Boston. Two hospitals may have just permanently closed, leaving care wastelands for lower income communities.

While the CEO buys mega yachts.

**** him.

**** PE.

I did some interviewing for positions with PE owned tech firms. I can't figure out why anybody works at them. Modest salary, no equity, sometimes no bonus, limited funds for growing the business. No future.

**** PE.

[Mark McM]

Originally Posted by redir

I remember that causing a huge stir in my little Virginia town when Backcountry distribution center moved in. We had this little shop called Backcountry Ski and Sports in town since, I think, the 1980's and they closed down shortly after. Never bought anything from them because of it, even if it really wasn't related. They were bullies and no one like a bully.

There are other "trademark" bullies in the bike industry. The Specialized case against Roubaix Cafe in Canada was a particularly famous one, but Trek apparently leads the industry in bringing trademark infringement cases. They appear to the think the common and long used english language word "trek" was invented and is owned by them, and will go after anyone that uses the word "trek" in a title. For example, they went after Subaru after they introduced a new SUV they named the "Crosstrek", and they went after Cooper Tire after they named an off-road tire the "Rugged Trek".

[.RJ]

Originally Posted by Mark McM

There are other "trademark" bullies in the bike industry. The Specialized case against Roubaix Cafe in Canada was a particularly famous one, but Trek apparently leads the industry in bringing trademark infringement cases. They appear to the think the common and long used english language word "trek" was invented and is owned by them, and will go after anyone that uses the word "trek" in a title. For example, they went after Subaru after they introduced a new SUV they named the "Crosstrek", and they went after Cooper Tire after they named an off-road tire the "Rugged Trek".

lawyer tax is the new lantz tax?

[echappist]

Originally Posted by C40_guy

PE just did a particularly nasty job on a group of hospitals in Boston. Two hospitals may have just permanently closed, leaving care wastelands for lower income communities.

While the CEO buys mega yachts.

**** him.

**** PE.

I did some interviewing for positions with PE owned tech firms. I can't figure out why anybody works at them. Modest salary, no equity, sometimes no bonus, limited funds for growing the business. No future.

**** PE.

+1 to all of the above. Retail, manufacturing, medical practices (e.g. dental and medical imaging), and skilled care facilities. The stories are all so similar that there's no longer any surprise re: the depravity and rapacity at play. Those "financed" using LBOs are particularly awful.

There may be the odd success PE acquisition that is good for the acquired company, but the likelihood of those are in the man-bites-dog territory.

It's really sad to see BackCountry and Competitive Cyclist go this way. Real shame...

I actually bought a few pairs of merino socks from CC last year. They were made by Giordana but had much better quality. Better order some more...