By David Clucas
Eastern Mountain Sports and Bob’s Stores exited bankruptcy reorganization July 19 under a new entity called Eastern Outfitters LLC, but its ownership and leadership pretty much remain the same.
Eastern Outfitters is a division of private-equity firm Versa Capital Management, as was Vestis Retail Group, which took the retailers into bankruptcy along with sister brand Sport Chalet three months ago. The owners used Chapter 11 to dump Sport Chalet and all its 47 stores — which they said was the most under-preforming business of the group — along with closing one Bob’s and eight EMS locations.
Versa then created Eastern Outfitters to buy back EMS and Bob’s out of bankruptcy in what’s known as a stalking-horse bid. An attorney representing creditors estimated the value of the bid at $96 million— including the $35 million Vestis Retail owed Versa prior to filing bankruptcy, any outstanding balance on the $125 million Wells Fargo loan Vestis Retail arranged to finance it operations during bankruptcy, the assumption of other liabilities and $1.5 million in cash.
With no other better bids emerging, the restructured business with 61 EMS and 34 Bob’s locations and about $400 million in annual sales came back to its previous ownership, including the appointment of Vestis Retail CEO Mark Walsh to the same role at Eastern Outfitters.
“Today is a new day for our customers, employees and partners,” Walsh said in a statement. “We move forward with a focused strategy and strengthened capital structure that will enable EMS and Bob’s to prosper.”
Officials said EMS and Bob’s will “continue to focus on advancing their leadership positions among their core demographic groups in the Eastern and Mid-Atlantic regions.” EMS is one of the nation’s largest specialty outdoor retailers, and Bob’s focuses on value-oriented footwear, apparel and work wear.
While EMS and Bob’s may have been in better financial condition than Sport Chalet, they undoubtedly were facing, and will continue to face, the challenges of an evolving retail landscape. In many ways, the consumer market is bifurcating its shopping habits down two avenues — strictly shopping for price, ease and speed of delivery online, or seeking a curated and experiential shopping experience on a local level at a specialty retailer. Those retailers caught in the middle — which some would say was the case at the now liquidating Sports Authority and Sport Chalet — are losing out.
It’s a lesson likely learned by EMS’ and Bob’s new, old, owners.
Photo courtesy Eastern Mountain Sports