Eastern Mountain Sports has its new lifeline.
Leading UK outdoor clothing and equipment retailer Mountain Warehouse has completed an agreement to acquire certain core assets of bankrupt Eastern Mountain Sports (EMS) for $10 million. The deal will keep all seven profitable stores open, the website up and running and secure the jobs of more than 100 EMS employees who are employed.
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EMS and its Bob's Stores siblings fell into bankruptcy when its parent company Mountain Sports LLC filed for Chapter 11 last June. Bob's clears all units. EMS was luckier, securing an offer from the UK retailer for at least $5 million for the intellectual property and some other assets. There was also a provision to pay a percentage of certain inventory at the store locations, which was initially expected to bring the total transaction value to $8 million. The big question early last month when the horse racing bid was revealed in bankruptcy filings was the uncertainty over which stores would remain open. EMS operated two dozen doors when it filed for Chapter 11, but there were only seven core locations that were considered profitable. The seven doors are located in Hadley, Massachusetts. Burlington, Vt.; Lake Placid, NY;, West Lebanon, NH; Saratoga Springs, NY; Portsmouth, NH, and N. Conway, NH
EMS's new lifeline is important because most retailers 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 for Chapter 11 report in 2017. It reacquired EMS under a new entity called Eastern Outfitters. A year later, Eastern Outfitters filed the second chapter 11 reference for the protection of the bankruptcy court. Mike Fraser's Sports Direct International Plc acquired the EMS nameplate but later sold it to GoDigitalMedia Group in May 2022.
Fortunately for EMS, Mountain Warehouse saw value in the New England retailer's business model. Mountain Warehouse said Tuesday that the June bankruptcy filing was due to leveraged debt when it was acquired by GoDigitalMedia, which has put pressure on its cash flow.
“We intend to maintain the iconic EMS brand, which has great heritage and DNA, and resonates with huge numbers of long-term 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,” said Mountain Warehouse founder and CEO Mark Neale. “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 stand-alone brand. In addition, it will retain the EMS name and the EMS market team led by Kerry Muricchio will remain in the US.
EMS was founded by two friends in 1967, who opened the first store in Wellesley, Massachusetts. 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 one stop shop in the UK. It has grown to more than 370 locations in nine countries, including the US. The US footprint has more than 50 locations and stores and online sales generate more than $85.5 million in annual revenue. The company said it sees the EMS acquisition as “an opportunity to expand its footprint in the US 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 February 25. Pre-tax profit for the group was 26.2 million pounds ($34.6 million). The online business, which includes the Mountain Warehouse Marketplace that sells more than 320 third-party brands, accounts for about a third of total revenue. In the current financial 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 remainder of the year.