Eastern Mountain Sports sees opportunities in the current recession and has closed on new financing totaling $50 million and a new, larger senior credit facility to help facilitate growth over the next few years.  The new influx in equity from its existing private equity partner, JH Whitney & Co., and the credit facility with Wells Fargo Retail Finance, gives the EMS a war chest to continue its growth efforts.


“The recession has been good for us,” said EMS CEO Will Manzer told SEW.  “We saw this coming two years ago and have been doing the right things to position ourselves for the economic downturn.”  Manzer said that they will see an impact on the top-line this year, but EMS is racking up record EBITDA performance. “We planned for a whole lot worse,” he said.


Manzer said the influx of capital and the increased credit line was “more than adequate” to support their growth plans.  He described the credit facility as a “significant” increase from the previous line with another lender.


EMS said that the new financing “positions the company well to continue its growth strategies.” The company had one of its largest remodels last fall when they tripled the size of their North Conway, NH location. That 18,000 square foot store, which was planned as a $3.5 million location, is expected to do nearly $5.0 million this year. In April of this year, the company opened a 13,400 square foot store in Annapolis, MD and in May, EMS opened its 18,000 square foot flagship store in SoHo, New York City.


For 2010, there are three additional confirmed openings planned in Hingham, MA, Collegeville, PA, and Waterford, CT with additional store openings being considered.  All three leases signed for 2010 are in the 15,000 square foot neighborhood, according to Manzer. The Hingham and Collegeville stores will be in lifestyle centers, while the Waterford store will be a free-standing unit.


“Real estate is a big opportunity for us,” said Manzer.  “We are seeing a significant decrease in square footage rates for new locations, particularly in lifestyle centers.” 


Manzer said some new store openings had been delayed this year because of delays by other tenants, but that looks to be easing now.  He left open the possibility that there could be more than three new locations in 2010 if the right deals came along.  Manzer also suggested that 2011 growth plans will accelerate.


“We look for proximity to venues and demographic fit first,” said Manzer when discussing location selection, adding that water and rock are critical components. “Having a destination location is a big plus.” Proximity to competition is less of an issue now as well.  Manzer said the new model allows them to co-exist with REI.  He said prior to the re-positioning, EMS was more of a “mini me” but is now a model that stands on its own.


EMS had 87 stores when it was acquired and Manzer credits Whitney with understanding the needs of the business from day one.  “They knew we had to close or remodel every one of those stores,” he said.  “We had stores in malls and we have none now.”


The current geographic footprint spans across 12 states from the Mid-Atlantic to the Canadian border and currently holds 64 stores. Manzer sees 90-100 stores in that region over time.  He suggested that expansion outside the current geographic area would occur in 2013, with the retailer moving more south and west.