EMS Charts Course for Growth
In the spirit of a true adventurer, Will Manzer, CEO of Eastern Mountain Sports, described 2009 as one of the best years the 42-year-old retail company had ever experienced.
Although the privately held EMS does not disclose revenues, Manzer admitted the success in 2009 was not entirely about sales—which he termed as softer than previous years, in keeping with the trend throughout the industry.
Rather, “2009 was a transformational year in terms of operations,” he explained, and success was measured by the company’s ability to focus on its core mission and defined niche. That said, Manzer added: “It was a very good profit year; EBITDA was above plan, and we exceeded budgets and plans on every level. We hit that illusionary goal of predictability.”
EMS, based in Peterborough, N.H., sells apparel, accessories and gear for outdoor athletic enthusiasts. It operates 64 stores in states from Maine to Virginia and has a national presence through its Web site store.
Despite a loyal following, the company has experienced some tough uphill treks. When Manzer signed on as president in 2003, he described it as a “very troubled” environment. In 2004, Manzer led a management buyout and committed his team to return to the philosophy on which the company was founded.
It’s a philosophy that positions EMS in a very specific niche market dedicated to serving all levels of outdoor athletes, from the novice to the expert, with best-in-class products and superior customer service.
Like the customers they serve, the management team at EMS realized that getting into shape for peak performance would require cutting fat and building muscle. They retained a cost consultant who helped them identify areas for improvements and enhancements, including a continuation of strategies already begun in real estate repositioning and brand development.
“We’re moving out of every mall location as leases come up for renewal,” Manzer said, “and we’ve redefined the basic store prototype from a 7,500-sq.-ft. space to a 15,000-sq.-ft. freestanding store, often in a lifestyle development.”
The company isn’t reducing its portfolio and expects to relocate essentially every store that is closed. Its real estate strategy is now centered on four distinct types of locations: destination locations, where playing outside is the norm for residents and visitors alike; gateway locations, where stores are positioned on routes leading to meccas of outdoor activities; residential locations where the population includes a high percentage of EMS customers; and urban sites.
A key part of the company’s overarching strategy is growth of the EMS brand, which encompasses new product development, as well as the resources to attract knowledgeable outdoor athletes to work in the stores.
“Our EMS-branded products are designed for function, outfitted with our signature aesthetic and compete with any of the other best-in-class manufacturers, such as North Face or Patagonia,” said Scott Barrett, chief marketing officer, EMS. “We put our brand on categories we feel we can lead, such as apparel, outerwear, tents, sleeping bags and travel gear. However, we won’t make products, such as kayaks, bikes or climbing equipment.”
Chief executive Manzer said EMS-branded products account for 35% to 38% of company sales, and represent a significantly larger percentage of the company’s profit margin.
To support its strategic objectives, EMS secured a $50 million term loan in August 2009 from lender GB Merchant Partners.
In anticipation of recessionary issues, EMS sought the additional financing to generate capital for sustained growth. This year, EMS plans to add three or four stores, with a couple of additional locations pending.