MERIDEN, Conn., April 18, 2016 /PRNewswire/ -- As part of its ongoing strategic review process, Vestis Retail Group, LLC ("Vestis" or "the Company"), the parent company of Eastern Mountain Sports ("EMS"), Bob's Stores ("Bob's") and Sport Chalet, today announced a series of steps that will collectively provide a stronger financial foundation for the Company. These steps focus on supporting the long-term success of EMS and Bob's while efficiently winding down Sport Chalet.
"When Vestis first acquired EMS and Sport Chalet, each company faced significant operational challenges and was on the verge of liquidation. We have made significant progress in stabilizing the businesses and improving overall performance across all our brands," said Mark Walsh, Chief Executive Officer of Vestis. "As a result, EMS and Bob's are now delivering solid performance but have been burdened by limited financial flexibility due, in part, to the unique competitive pressures facing Sport Chalet. After reviewing a variety of strategic alternatives, we determined that the best path forward is to separate the businesses and confront the challenges that have been hindering our overall progress. We are confident EMS and Bob's will be well-positioned to thrive at the conclusion of the process."
As part of the planned transition, Sport Chalet began store closing sales on April 16, 2016, at all of its locations, while EMS and Bob's began closings at a total of just nine locations (eight EMS and one Bob's) where real estate costs are unfavorable and have prevented the store from achieving sufficient profitability. The balance of the EMS and Bob's lease portfolio will be evaluated for efficiencies as part of the Company's broader efforts to strengthen its financial performance.
To achieve its financial objectives, Vestis earlier today initiated voluntary reorganization proceedings under Chapter 11 of the U.S. Code and proposed the sale of EMS and Bob's to funds advised by Versa Capital Management, LLC ("Versa"), which would acquire substantially all of the remaining assets of the Company. The agreement with Versa, which will be subject to court approval, seeks to position EMS and Bob's to maximize future opportunities. The Company also expects to use the reorganization process to best address legacy liabilities dating back to before EMS and Sport Chalet were first acquired.
Vestis expects to complete the proposed sale in mid-Summer, in time for the important back-to-school and holiday seasons. In the interim, the Company expects to operate its go-forward EMS and Bob's stores and eCommerce sites as usual and to continue store closing sales at other locations as planned. The Company expects to continue employee wage and benefit programs as usual, maintain EMS and Bob's customer loyalty programs, honor all EMS and Bob's customer gift cards and store credit in full and pay suppliers in the normal course of business for all goods and services delivered from today forward. Vestis has secured a commitment for up to $125 million in debtor-in-possession ("DIP") financing from its existing lender, Wells Fargo Capital Finance, LLC, which combined with cash from existing operations will help ensure the Company is able to meet its financial obligations throughout the process.
At the completion of the process, the combination of EMS and Bob's will be a stronger business partner with a renewed focus on the core successful operations in the eastern U.S., where they will continue to operate an approximately $400 million multi-channel retailer.
More information is available at VestisRestructuring.com. Vestis has also established a supplier support center, which may be reached at (866) 967-0675 or [email protected].
Vestis is advised in this transaction by Klee, Tuchin, Bogdanoff & Stern LLP, Lincoln Partners Advisors LLC and FTI Consulting.
Additional Store Closure Information
- All Sport Chalet stores remain open and will run store closing sales for the next several weeks.
- The Sport Chalet eCommerce website is no longer selling merchandise effective April 16th, 2016.
- Sport Chalet gift cards, rewards certificates and store credits will be honored in Sport Chalet stores through April 29th, 2016. Customers who are unable to visit us before this date are invited to transfer gift card balances to a gift card from one of our sister stores, Eastern Mountain Sports or Bob's Stores through July 29th, 2016. Additional information is available at www.SportChalet.com.
- Customers are encouraged to pick up any equipment that had been left for repair and to return any rental equipment before April 29th, 2016.
EMS and Bob's:
- EMS locations identified to close: Christiana (DE), Dulles (VA), Foxborough (MA), Moorestown (NJ), North Brunswick (NJ), University of Pennsylvania (Philadelphia, PA), Warwick (RI) and West Hartford (CT)
- Bob's location identified to close: South Portland (ME)
About Vestis Retail Group
Based in Connecticut, Vestis Retail Group, formed by Versa Capital Management, operates Eastern Mountain Sports (EMS), Bob's Stores and Sport Chalet. EMS is the second largest U.S. multi-channel retailer of human-powered outdoor sports apparel and equipment with stores in the Northeastern and Mid-Atlantic states. Bob's is a 60-year-old, award-winning Northeastern retailer of value-oriented footwear, apparel and work wear. Sport Chalet is a full service specialty sporting goods retailer operating stores in Arizona, California, Nevada and Utah. More information is available at www.ems.com and www.bobstores.com.
About Versa Capital Management
Based in Philadelphia, PA, Versa Capital Management is a private equity investment firm with more than $1.4 billion of assets under management focused on control investments in special situations involving middle market companies where value and performance growth can be achieved through enhanced operational and financial management. Versa's portfolio includes retailers Avenue Stores and The Wet Seal; performance fabric manufacturer Polartec; western restaurant chain Black Angus Steakhouses; and manufacturers that service a variety of industries. More information can be found at www.versa.com.
SOURCE Vestis Retail Group