Zumiez Bids $7.2 Million for Bankrupt Active
The embattled Active Ride Shop filed a motion on May 15 with the U.S. Bankruptcy Court in Riverside, Calif., asking the court to approve the sale of all of its assets to Zumiez Inc., operator of 350 mall-based surf/skate shops nationwide. The deal, which is valued at up to $7.2 million, calls for all of Active’s assets to be sold to Active Acquisition, a wholly owned subsidiary of Zumiez.
Mira Loma, Calif.–based Active, which filed for bankruptcy protection in March, currently operates 21 stores and an online shop. Prior to filing for bankruptcy, the retailer abruptly closed eight stores and laid off approximately 50 employees after having racked up more than $15 million in debt.
According to the filing, Active has been searching for a buyer since August 2008 with the help of PCG Capital Growth, its investment banker. Under the terms of Zumiez’s proposed deal, Zumiez would purchase Active’s assets for “an amount greater than liquidation value” and $100,000 per each of the Active stores it acquires. According to Active, the cost of its entire inventory stood at approximately $5.2 million on March 30, 2009.
A hearing on the proposed sale is set for June 4. Active had asked for a hearing to be set before July 1 so as to “avoid continued losses, a lower inventory valuation and resulting lower purchase price and the need to incur the administrative liability for—and finance the significant cash burden caused by—rent due for July 2009.”
Meanwhile, Active continues to try to move its inventory with promotions such as “What Up Wednesdays,” during which customers receive a free T-shirt with the purchase of any premium T-shirt, and “Choose Your Own Discount,” where shoppers can vote for what sort of discount, from free shipping to 20 percent off all purchases, they’d like to receive the following week.
At its height, Active operated 29 retail stores. In 2007 and 2008 the retailer saw increased losses because of rapid over-expansion and market saturation. Zumiez, which sells many of the same brands and product categories as Active, saw its sales grow 7.1 percent and its net income jump by 32.1 percent in the fiscal year ending 2009. As of January 2009 it had more than $33 million in cash in its coffers. —Erin Barajas
