Eastern Mountain Sports has its new lifeline.
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The U.K.’s leading outdoor apparel and equipment retailer Mountain Warehouse has finalized a deal to acquire certain key assets of bankrupt Eastern Mountain Sports (EMS) for $10 million. The agreement will keep all seven profitable stores open, the website in operation and secure the jobs of more than 100 of EMS’ staff employed.
EMS and its sibling Bob’s Stores fell into bankruptcy when its operating parent Mountain Sports LLC filed its Chapter 11 petition this past June. Bob’s is liquidating all units. EMS was luckier, having secured a stalking-horse bid from the U.K. retailer for at least $5 million for the intellectual property and certain other assets. There was also a provision to pay a percentage of certain inventory in the store locations, which initially was expected to bump up the total transactional value to $8 million. The big question early last month when the stalking-horse bid was disclosed in bankruptcy court papers was the uncertainty of which stores would stay open. EMS operated two dozen doors when the Chapter 11 petition was filed, but there were only seven core locations considered profitable. The seven doors are located in Hadley, Mass.; Burlington, Vt.; Lake Placid, N.Y.;, West Lebanon, N.H.; Saratoga Springs, N.Y.; Portsmouth, N.H., and N. Conway, N.H.
EMS’ new lifeline is significant because most retailer that end up in bankruptcy proceedings for the third time tend to end up in the retail graveyard, which is what happened to EMS sibling Bob’s. EMS was acquired in 2012 by Versa Capital Management. Vestis filed its Chapter 11 petition in 2017. It re-acquired EMS under a new entity called Eastern Outfitters. One year later, Eastern Outfitters filed the second Chapter 11 petition for bankruptcy court protection. Mike Fraser’s Sports Direct International Plc acquired the EMS nameplate, but later sold it to GoDigitalMedia Group in May 2022.
Luckily for EMS, Mountain Warehouse saw value in the New England retailer’s business model. Mountain Warehouse said on Tuesday that the June bankruptcy filing was due to debt leverage when it was acquired by GoDigitalMedia, which put a strain on its cash flow.
“We plan to retain the iconic EMS brand, which has a great heritage and DNA, and resonates with huge numbers of long-standing customers. We will also continue to work with the highest quality and best-known outdoor brands in the world to stabilize and then grow the business,” Mountain Warehouse founder and CEO Mark Neale said. “We are convinced that there is a great business here, with a tremendous pedigree, and passionate people who can help us understand the market even better and create a bright future.”
Mountain Warehouse’s plan includes keeping the EMS operation as a standalone brand. In addition, it will keep the EMS name, and the EMS buying team led by Kerry Muricchio will remain based in the U.S.
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EMS was founded by two friends in 1967, who opened the first store in Wellesley, Mass. The company’s online operations and seven core stores had combined sales of nearly $27 million in 2023.
Mountain Warehouse began operations in 1997 as a single store in the U.K. It has grown to more than 370 locations across nine countries, including the U.S. The U.S. footprint has over 50 locations, and the stores and online sales generate annual revenue of more than $85.5 million. The company said its sees the EMS acquisition as an “opportunity to expand its footprint in the U.S., and take the EMS brand into more territories, including Canada and Europe.”
Mountain Warehouse last month posted record revenue of 386 million pounds ($510 million) for the full year ended Feb. 25. Pre-tax profits for the group were 26.2 million pounds ($34.6 million). The online business, which includes Mountain Warehouse Marketplace that sells more than 320 third-party brands, accounts for about a third of total revenue. In the current fiscal year, the company opened 20 new stores, including its first doors in Australia. Current plans include an additional 30 store openings and relocations for the balance of the year.
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