(Reuters) - U.S. hunting and fishing chain Gander Mountain Co is preparing to file for bankruptcy as early as this month, after an aggressive effort to expand its store base failed to pull in new customers, according to people familiar with the matter.
Gander Mountain is working with financial advisory firm Lighthouse Management Group Inc and law firm Fredrikson & Byron PA as it gets ready to file for bankruptcy, the people said this week.
The sources asked not to be identified because the matter is confidential. Gander Mountain and Lighthouse Management declined to comment this week, while a spokeswoman for Fredrikson did not return a request for comment made on Wednesday.
Gander Mountain, which bills itself as America’s firearms superstore, has faced challenges capitalizing on a booming gun market. The Federal Bureau of Investigation carried out a record 27.5 million background checks on people seeking to buy guns in 2016, up 19 percent from the year before.
Gander also has stiff competition from rivals like Bass Pro Shops and Cabela’s Inc CAB.N, which have been revamping their stores to attract customers with restaurants and shooting activities.
Bass Pro agreed last year to buy Cabela’s for $5.5 billion, potentially putting more pressure on Gander Mountain, though the deal has to overcome major hurdles to close, including antitrust concerns.
Based in Saint Paul, Minneapolis, Gander Mountain was taken private in 2010 by Gratco, a holding company controlled by Gander Chairman and Chief Executive David Pratt, and Holiday Stationstores, a gas-station retail operation controlled by Minnesota’s Erickson family.
Gander Mountain confronts financial trouble after an aggressive expansion across the United States for a total of about 160 stores, with nearly 60 new outposts opened or announced since 2012.
The company has a $30 million loan, and revolving credit lines for $25 million and $500 million, according to Thomson Reuters data. It is not clear how much money in the credit lines Gander Mountain has yet to draw down on.
Gander Mountain would be the fifth outdoor retailer to file for bankruptcy in the last 12 months, following sports retailers such as Sports Chalet and Sports Authority Inc, which both sought court protection from their creditors.
Gander Mountain wanted to address some of its challenges by exploring a sale last year of its online and catalog boating business called Overton‘s, but was unable to find a buyer at agreeable terms, according to the sources.
Reporting by Lauren Hirsch and Jessica DiNapoli in New York; Editing by Bernard Orr