Vestis Retail Group has filed a Chapter 11 petition for bankruptcy court protection.
The filing was in a Delaware bankruptcy court following the retail group’s strategic review. Private-equity firm Versa Capital Management owns Vestis, which specializes in distressed companies, is the parent company of Eastern Mountain Sports, Bob’s Stores and Sport Chalet.
The company has decided to shut down Sport Chalet. Store closing sales began on Saturday. Vestis is also closing an addition nine locations, comprised of eight Eastern Mountain sites and one Bob’s store. Vestis acquired Bob’s, a value-oriented retailer of apparel, footwear and accessories for men, women and children, in 2008 from The TJX Cos.; Eastern Mountain, an outdoor gear retailer, in 2012 and Sport Chalet, a retailer of sporting goods, footwear and apparel, in 2014.
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Mark Walsh, chief executive officer of Vestis, said, “When Vestis first acquired Eastern Mountain Sports 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.”
Walsh said that Eastern Mountain and Bob’s are delivering “solid performance, but have been burdened by limited financial flexibility due, in part, to the unique competitive pressures facing Sport Chalet.”
In a statement filed with the bankruptcy court, Walsh said that “both industry wide and internal challenges have complicated the debtors’ efforts to stabilize and improve their brands. The continuing shift in consumer behavior away from tradition brick-and-mortar retailers and toward online-only stores, together with increased competition from big-box and specialty sporting goods retailers, have contributed to an industry-wide weakness in the debtors’ business segments.”
The company said that it filed for Chapter 11 protection to achieve its financial objectives. The plan is for Eastern Mountain and Bob’s to be sold to Vestis BSI Funding II, funds advised by Versa Capital. That sale is subject to bankruptcy court approval, as well as a court-sponsored auction which could bring in betters offers.
Vestis said it expects to complete the sale by midsummer, in time for the back-to-school and holiday selling seasons.
Wells Fargo Capital Finance has agreed to commit up to $125 million in a debtor-in-possession financing facility. In the petition on file with the bankruptcy court, Vestis listed estimated assets at up to $50,000, and estimated liabilities at between $100 million up to $500 million. Among its top unsecured creditors are: Nike USA Inc., Beaverton, Ore., $7.3 million; Under Armour Inc., Baltimore, Md., $2.7 million; Wolverine World Wide Inc., Rockford, Mich., $1.9 million; Levi Strauss & Co., Eugene, Ore., $1.7 million, and North Face, Appleton, Wisc., $1.6 million.
Versa also owns specialty apparel chains Avenue Stores and The Wet Seal, as well as performance fabric manufacturer Polartec.