Following weeks of speculation, Vestis Retail Group LLC has pulled the trigger.
The owner of outdoor retailer Eastern Mountain Sports, family footwear-and-apparel seller Bob’s Stores and sporting-goods retailer Sport Chalet filed for Chapter 11 protection today in the U.S. Bankruptcy Court for the District of Delaware.
The Connecticut-based firm said it will exit the Sport Chalet business altogether — it shut down the retailer’s website Friday and started the process of closing all 50 or so stores — and plans to sell EMS and Bob’s to funds advised by Versa Capital Management LLC, the Philadelphia-based private equity firm that also owns Vestis. The proposed sale is expected to close by mid-summer.
Vestis said it also initiated the closing of eight EMS locations and one Bob’s location due to high real estate costs.
“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 Vestis CEO Mark Walsh in a statement today. “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.”
The firm had said in early April that it was exploring several options for its brands.
“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,” Walsh added. “We are confident EMS and Bob’s will be well-positioned to thrive at the conclusion of the process.”
In its bankruptcy filings, obtained by Footwear News, Vestis lists the value of its assets at less than $50,000 while it estimates that its liabilities total between $100 million and $500 million.
Among Vestis’ creditors with the largest unsecured claims are Nike Inc., owed $7.3 million; Under Armour Inc., owed $2.7 million; Wolverine World Wide Inc., owed $1.9 million; and the North Face brand, owed $1.6 million.
Vestis said it has also secured up to $125 million in debtor-in-possession financing from its existing lender, Wells Fargo Capital Finance LLC.
High real estate costs, increased brick-and-mortar competition and pressure from e-commerce players have led a number of players in the sporting goods space, including City Sports and Sports Authority, to seek bankruptcy relief in recent months.