Regional sports retailer Sport Chalet has begun the process of closing all of its 47 stores across Arizona, California, Nevada, and Utah, and also shuttered its website, parent company Vestis Retail Group said Monday.
The move is part of a strategy to focus on the long-term success of its other two regional sports retailers, Bob’s Stores and Eastern Mountain Sports, according to Vestis.
Also on Monday, Vestis began reorganization proceedings under Chapter 11 and is proposing the sale of EMS and Bob's to funds advised by Versa Capital Management, which would acquire substantially all of its remaining assets. The agreement between Vestis and Versa, subject to court approval, “seeks to position EMS and Bob's to maximize future opportunities” and deal with “legacy liabilities dating back to before EMS and Sport Chalet were first acquired.”
When Vestis acquired Sport Chalet and Eastern Mountain Sports in 2014, both retailers were in dire straits financially, and competition in the space has only heated up since then. EMS has recovered somewhat, but Sport Chalet hasn’t “due, in part, to unique competitive pressures,” Vestis CEO Mark Walsh said in a statement.
“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 also said. “We are confident EMS and Bob's will be well-positioned to thrive at the conclusion of the process.”
Sport Chalet began store closing sales on April 16 at all of its 47 U.S. locations, while EMS and Bob's began closings at nine locations (eight EMS and one Bob's) where real estate costs are unfavorable and have hindered those locations' efforts to achieve sufficient profitability, Vestis said. The company will evaluate the remainder of the EMS and Bob's lease portfolio for efficiencies.
The fierce competition in the sporting goods space has also felled Sports Authority, which filed for bankruptcy early last month. A statement from CEO Michael Foss said Sports Authority will close or sell around 140 stores and two distribution centers in the coming months as part of the process. Last week, Sports Authority postponed a scheduled auction of its assets to May in light of “substantial interest” from several entities.
Sports Authority was once the largest sporting goods chain in the U.S., but it was hobbled by mounting debt, weak e-commerce returns and failures to meet increasing challenges in the space as general merchandise brands like Wal-Mart and Target and apparel retailers like Gap moved assertively into the sporting gear space.