In a not-so-surprising move, Vestis Retail Group LLC, the operator of Eastern Mountain Sports and Bob’s Stores, filed for bankruptcy on Monday with plans to shutter its Sport Chalet stores. The company reportedly plans to restructure around its more stable brands Eastern Mountain and Bob’s Stores, with the possibility that the two chains will remain in the hands of private-equity backer Versa Capital Management.
Versa, which acquired each of the struggling legacy chains separately and combined them under the same parent, has made an offer to hold on to its stake, according to papers filed Monday in U.S. Bankruptcy Court in Wilmington, Del., and will serve as the lead bidder. Versa said it would pay $1.5 million for the stores that will stay open and will also forgive $35 million in debt and other liabilities, court papers show.
Vestis already begun the liquidation of Sport Chalet’s 47 stores across California, Arizona and Nevada, as well as an additional eight EMS stores and one of Bob’s Stores. Liquidators Hilco Merchant Resources LLC and Gordon Brothers Retail Partners LLC are leading the going-out-of-business sales, court papers show.
Vestis CEO Mark T. Walsh tied competition from online shopping and the unseasonably warm winter in the Northeast during 2015 to the financial woes at Bob’s Stores and EMS. There also were “conversion issues” as Vestis tried to transition to integrated software platform in the fourth quarter of 2015, which led to problems with processing and delivering inventory to stores during the holiday season, mainly at Sport Chalet.
Versa, which specializes in turning around struggling companies, formed Vestis in 2012 after purchasing EMS and Bob’s Stores. The company added struggling West Coast-based Sport Chalet in 2014 as the chain teetered near bankruptcy.
