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04/18/2016

Closing time for Sport Chalet as parent company declares Chapter 11

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Angeles-based Sport Chalet has initiated going out of business sales at its 47 stores and closed down its online operation.


On Monday, Vestis Retail Group LLC, which operates Sport Chalet along with Eastern Mountain Sports and Bob’s Stores, filed for Chapter 11 bankruptcy protection. The filing was not unexpected and follows in the wake of Sports Authority’s Chapter 11 filing in March.


In a statement, Vestis said it was focused on on supporting the long-term success of EMS and Bob's while winding down Sport Chalet. It left the door open to future store closings in the two brands.


"When Vestis first acquired EMS and Sport Chalet, each company faced significant operational challenges and was on the verge of liquidation,” said Mark Walsh, CEO of Vestis. “We have made significant progress in stabilizing the businesses and improving overall performance across all our brands.”


But Walsh added that while EMS and Bob's are now delivering solid performance, they have been burdened by limited financial flexibility “due, in part, to the unique competitive pressures facing Sport Chalet.”


In addition to shutting down Sport Chalet, Vestis is closing eight EMS stores and one Bob's store due to unfavorable real estate costs. It did not rule out closing additional EMS and Bob’s locations, saying that “the balance of the EMS and Bob's lease portfolio will be evaluated for efficiencies as part of the company's broader efforts to strengthen its financial performance.”


Vestis said it proposed that Eastern Mountain Sports and Bob's Stores be sold to funds advised by Versa Capital Management, the private equity firm that owns Vestis.


“The combination of EMS and Bob's will be a stronger business partner with a renewed focus on the core successful operations in the eastern U.S., where they will continue to operate an approximately $400 million multi-channel retailer,” the company stated.


The agreement with Versa will be subject to court approval.