I was surprised to hear of this from a buyer of a prominent Western retailer. With the news, they immediately put FL at 50% off to draw down all in-store inventory as fast as possible. It was a very surprising bit of news for retailers I work with, to say the least.
Recently, Ibex Outdoor Clothing (merino wool) mentioned pulling out of retail and going direct in recent months, then word gets around that they are now going out of business. GoLite tried it as well years ago, and folded. It isn't a death sentence for a brand per se, but an interesting choice to have retailers for a decade help build the brand, then pull the plug on them, and hope that the remaining channel of direct to consumer will make up for it via improved margins, etc. It is now their only channel.
From my seat, it just doesn't seem like the best long-term strategy. Successful brands reach consumers in a variety of ways and have so for years, including selling online, having their own physical stores and via a solid base of retailers. Now their only option is online -- no more trying on products for size, seeing the new products first hand, getting advice from store employees, etc.
Retailers offer brands two specific benefits that Direct does not: exposure to a wide range of customers and the "real" hands on experience of the brand. Products on the shelf for a certain amount of time allow for repeat interactions with the products, which is key for attracting consumers who were not specifically searching for the brand or product in question.
I hope this is a the right move for FL, but disappointed to see them abandon retail partners so quickly. I would be curious to know how they are going to take care of retailers who committed to large preseason orders with January 2018 ship dates...