RETAIL
Sport Chalet Closing
When Norbert Olberz and his wife, Irene, bought a ski and tennis shop in La Canada Flintridge in 1959 and named it Sport Chalet, the surfing industry was barely on the scene.
The couple was big into the ski scene—even setting up a separate shop in a former gas station for ski rentals. In their store, they stocked scuba gear and mountain climbing merchandise for the outdoorsy type, and when surfing became popular in the 1960s, they started selling long boards and wet suits.
Eventually the chain grew to some 55 stores, but on April 16, the retail group that bought the chain in 2014 announced it was closing all 47 stores in California, Nevada, Utah and Arizona and ceasing online sales. Sport Chalet will be no longer.
Store closing sales will be going on until April 29, said the chain’s owner, Vestis Retail Group, also the parent company of Eastern Mountain Sports and Bob’s Stores, which are closing nine stores.
Two days after announcing it was closing Sport Chalet, Vestis filed for Chapter 11 bankruptcy protection with plans to sell Eastern Mountain Sports and Bob’s Stores to Versa Capital Management, a Philadelphia private-equity investment firm which created Vestis Retail Group, based in Connecticut. Versa’s other apparel-related businesses include Avenue Stores, The Wet Seal and Polartec.
“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 of Vestis, in a statement. “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.”
Vestis has secured a $125 million debtor-in-possession loan from its existing lender, Wells Fargo Capital Finance, which will help ensure the company is able to meet its financial obligations. Vestis hopes to complete the sale of Eastern Mountain Sports and Bob’s stores by mid-summer.
Vestis acquired Sport Chalet, which had become a publicly traded company, for $17 million and assumed $52.4 million in debt. The California sporting goods chain had not turned a profit in seven years and its same-store sales had declined for six years. Over the years, Sport Chalet relied on loans to finance its business and open new stores—with debt mounting.
For fiscal 2014, Sport Chalet lost $10.1 million on $344 million in sales. When the retail chain was sold to Vestis in 2014, the average store size was 41,000 square feet and the company was known for having a wide selection of merchandise for every sport out there.
Over the years, the sporting goods retail environment has become more competitive with Dick’s Sporting Goods recently entering the Southern California area. For years, Big 5 has been a major player in the arena.
Last month, Sports Authority, once the largest chain of its kind, said it was filing for Chapter 11 bankruptcy protection. It will close 140 stores – about one third of its total store numbers. The company said it had about $1 billion in liabilities and between $500 million and $1 billion in assets.
