Vestis Retail Group, which consists of the Eastern Mountain Sports (EMS), Bob’s Stores (Bob’s) and Sport Chalet chains, put the rumor mill to rest on Monday.
After a couple weeks of will-they-or-won’t-they reports, the Meriden, Connecticut-based company, owned by affiliates of Versa Capital Management, filed for Chapter 11 bankruptcy protection.
Vestis also announced that all 50-plus Sport Chalet locations would shutter in the coming weeks. Liquidation sales started on Apr. 16. The company had acquired the sporting goods chain in June 2014.
In addition, eight EMS stores and one Bob’s are on the chopping block, but more closures could be on the way once the company evaluates the remainder of its lease portfolio. According to a press release, the locations confirmed to shut down were chosen because “unfavorable” real estate costs had prevented the stores from “achieving sufficient profitability.”
“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,” Mark Walsh, chief executive officer of Vestis, said. “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.”
Court papers filed proposed the sale of EMS and Bob’s, as well as all remaining assets, to Versa. The deal is expected to close in midsummer, subject to court approval, in time for the back-to-school and holiday seasons.
In the meantime, Vestis expects to operate its go-forward EMS and Bob’s stores and e-commerce sites as usual and to continue going-out-of-business sales at other locations as planned.
To fund its continued operations and meet financial obligations during Chapter 11 proceedings, the company has secured a $125 million loan from its existing lender, Wells Fargo.
The EMS and Bob’s locations confirmed to close are:
• Christiana, Delaware
• Dulles, Virginia
• Foxborough, Massachusetts
• Moorestown, New Jersey
• North Brunswick, New Jersey
• University of Pennsylvania, Philadelphia, Pennsylvania
• Warwick, Rhode Island
• West Hartford, Connecticut
• South Portland, Maine (Bob’s)