Specialty retail distributors have struggled in the last year as economic issues, such as rising inflation, high interest rates, and cautious consumer spending, have reduced profits.
Sometimes, the loss of distribution agreements can devastate companies.
💸💰 Don’t miss the move: Subscribe to TheStreet’s free daily newsletter 💰💸
Diamond Comic Distributors, a leading distributor of comics, graphic novels, toys, games, and other pop culture-related merchandise, filed for Chapter 11 bankruptcy along with three affiliates seeking a sale of their assets after losing exclusive distribution agreements with comic book publishers DC Entertainment, Marvel Worldwide, and Image Comics.
Related: Distressed iconic food brand files for Chapter 11 bankruptcy
The loss of these exclusive agreements directly led to a decline in the debtor’s overall sales volume, and its problems grew with increased operating expenses. These economic hardships, combined with consumers’ reduced spending habits, led to severe financial distress.
Long before party supply retailer Party City filed for Chapter 11 bankruptcy on Dec. 21, 2024, its wholly owned subsidiary and supplier Anagram Balloons on Nov. 8, 2023, filed for Chapter 11 bankruptcy seeking to sell its assets to its first-lien lenders.
The Eden Prairie, Minn., balloon retailer manufactured and sold foil balloons and inflated décor domestically and internationally to party supply specialty stores, grocers, mass marketers, parks, drugstores, and discount variety stores
Another specialty retail sector has also faced financial distress over the years.
Firearms industry faces distressÂ
The firearms industry has been resilient throughout the nation’s history, dating back to its early years in 1816 when Eliphalet Remington II handcrafted his first rifle barrel at his father’s forge and brought it to Utica, N.Y., to fabricate into a flintlock rifle, according to the Remington website.
Over the years, Remington evolved, manufacturing rifles, handguns, and ammunition. The company filed for bankruptcy twice, in 2018 and 2020, before its assets were sold and it emerged as a new company known as RemArms that same year.
Sam Colt contributed his firearms legacy after he patented the first revolving-cylinder pistol in 1836 and began manufacturing in Paterson, NJ, according to the company’s website.
Colt Manufacturing’s success in developing, manufacturing, and selling firearms over the years continued until 2015 when it filed for Chapter 11 bankruptcy to reorganize and sell its assets.
Another iconic gun manufacturer is Springfield, Mass.-based Smith & Wesson, which was founded in 1852, is the top gun manufacturer in the U.S., according to the most recent data from ATF. The company, however, has never filed for bankruptcy.
A new gun manufacturer, Watchtower Firearms LLC, was established in 2022 and now offers its Apache 9mm pistol, its Bridger 7mm bolt action rifle, and other custom and special edition rifles.
Related: Devastating news forces Tesla rival to file Chapter 11 bankruptcy
The fledgling company is still developing new products, such as its Commander pistol and Raider Series rifle that its website says is coming soon.
Shutterstock
Watchtower Firearms files for bankruptcyÂ
And now, Watchtower Firearms on Feb. 27 filed for Chapter 11 bankruptcy, facing a multitude of financial problems.
The Frisco, Texas, firearms maker faced operational challenges, tax obligations, and significant vendor and service provider debt that led to its financial distress.
More bankruptcy:
- Popular breakfast dining chain files for Chapter 11 bankruptcy
- Huge national car wash chain files Chapter 11 bankruptcy
- Troubled trucking company files for Chapter 11 bankruptcy
It’s likely that rising inflation, increased interest rates, and consumers’ changing attitudes toward spending impacted the company’s financial situation.
The debtor listed $10 million to $50 million in assets and liabilities in its petition filed in the U.S. Bankruptcy Court for the Northern District of Texas and indicated funds would be available to distribute to unsecured creditors.
Watchtower’s largest unsecured creditors include Dasun USA/Alpha Foxtrot, owed over $686,000; Department of Treasury, owed over $409,000; and 2020 Exhibits Inc., owed over $359,000.
Related: Veteran fund manager unveils eye-popping S&P 500 forecast
