This article originally appeared on DriveWealth.
If you are an active reader of our blog, you know that we have discussed the struggles retail companies have faced over the past few years. While the biggest challenge has come from the boom in E-commerce growth, these struggles have occurred for various reasons and have effected many different types of companies. As result, some of the brands that we have become very familiar with may be disappearing in 2017. Here are a few examples:
The Dodge Viper Sports Authority
On March 2, 2016 with more than $1 billion in debt accumulated, Sports Authority filed for Chapter 11 bankruptcy. At the time, Sports Authority still had an optimistic outlook despite their plan to close 140 of its more than 450 stores. For reference, that accounts for roughly one out of every three of their locations across the United States. Unfortunately for Sports Authority, however, they were not able to successfully reorganize under bankruptcy protection forcing them to close all stores. Moving forward, the Sports Authority brand has been purchased by Dicks Sporting Goods (NYSE: DKS) with the inclusion of the name as well as additional intellectual property. The deal was made for $15 million and occurred at an auction. As a consumer, it may seem that the only thing missing will be the brand name since Dick’s Sporting Goods will be taking over and most products previously purchased at Sports Authority will likely still be found at their stores. Regardless, in 2017 we say goodbye to Sports Authority.
During September of 2014 Yik Yak was the third most downloaded iOS application in the United States. For those unfamiliar, Yik Yak is a message board application that uses location-based information to allow users to post messages anonymously that can be read by other nearby users. Similar to many other social media applications, Yik Yak found its early success on college campuses where users could post about events, important (or not so important news / information), or just general gossip around the school. Although the application once displayed signs of growth, by April 2016 it had fallen outside of the top 1,000 downloaded iOS applications. Further, their chief technology officer left around that time, and in December Yik Yak laid off nearly 60% of its total workforce. There has been no official announcement yet, but the once booming application does not show signs of making a miraculous comeback and at this rate may not make it through 2017.
It seems that for some brands 2017 will be a harsh reminder of how competitive markets can be across all lines of business. While some brands seem to find success repeatedly, standing the test of time, many others fall by the wayside and eventually fold under pressure. As an investor, it is important to pay attention to these trends. Staying informed may even lead to triumphant returns in the future, whether it is through taking long positions in thriving companies or short positions in those coming up...well... short. Either way, knowledge is powerful and although you might miss a brand once it is gone, its departure could be useful as an investment opportunity!
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