Dive Brief:
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With an offer of $5 million, U.K.-based outdoor and sports gear retailer Mountain Warehouse has emerged as the stalking horse bidder for Eastern Mountain Sports’ intellectual property. The bankruptcy auction ends by Aug. 30, when the deal is scheduled to close, per court documents.
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After that date, EMS will close any inventoried stores until the deal is complete, and it would be up to Mountain Warehouse to reopen them. If EMS accepts a higher bid, Mountain Warehouse is entitled to a $150,000 break-up fee, according to court filings.
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In June, EMS filed for Chapter 11 jointly with Bob’s Stores; both chains are owned by GoDigital Media Group.
Dive Insight:
If this deal goes through, Eastern Mountain Sports, always a relatively small Northeast chain, will shrink further. At press time, the EMS e-commerce website was down, with a “Gone hiking” notice promising a “new, enhanced website soon.”
Mountain Warehouse plans to operate seven stores under the Eastern Mountain Sports banner, per a press release from Hilco Merchant Resources, which is co-managing liquidations. That’s down from more than 20 now.
Still, EMS President Dave Barton in a statement said it gives the 50-plus-year-old chain a chance. Bob’s and EMS had faced a liquidity crisis that forced them to bankruptcy court, Barton previously said. Seven years ago, U.K. company Sports Direct, now Frasers Group, acquired both chains during a previous bankruptcy and sold them to GoDigital five years later.
“This prospect with a company that shares our values and commitment to the outdoor community marks an exciting opportunity for Eastern Mountain Sports,” Barton said. “EMS will continue to provide our customers with the best outdoor gear and experience while supporting our dedicated employees and local communities.”
Founded in 1997, Mountain Warehouse has run its own U.S. stores for more than a decade, and operates more than 350 stores globally, per the release.
In the meantime, Hilco Merchant Resources, in a joint venture with Gordon Brothers, is running liquidation sales at some EMS stores and “inventory blowout events” at others, with discounts up to 60% off storewide. As part of its bid, in addition to the $5 million for the EMS IP, Mountain Warehouse has offered to pay 75% of the cost of the inventory at the seven locations it expects to run, estimated at $3 million, per court documents.