TEAM PLAYER: Sport Chalet was acquired by Vestis Retail Group, to be added to the group's other chain of sporting-goods stores. Above, the Sport Chalet at FIG@7th in downtown Los Angels.
SPORT CHALET
Sport Chalet Acquired by East Coast Retail Group
Sport Chalet Inc., a prominent West Coast retailer of sporting goods for more than 50 years, was acquired by Vestis Retail Group,which runs Bob’s Stores and Eastern Mountain Sports.
The purchase price was listed as $17 million in cash, but Vestis is also assuming more than $52 million of Sport Chalet debt.
Sport Chalet, based in the Los Angeles suburb of La Canada Flintridge, will become a private company after the transaction closes at the end of the third quarter. Sport Chalet will remain headquartered in California with Craig Levra staying on as chairman, chief executive officer and president.
Vestis, which is owned by Versa Capital Management LLC, a Philadelphia-based private equity firm with more than $1.4 billion in assets, will make a cash tender offer for all of Sport Chalet’s Class A and Class B shares for $1.20 per share. Shares of Sport Chalet Class A stock rose 31 cents, or 37 percent, to $1.15 on the Nasdaq.
The deal will create a fleet of 150 stores with $800 million in combined sales. Sport Chalet has 50 emporiums in California, Nevada, Arizona and Utah. Eastern Mountain Sports operates 68 stores. Bob’s runs 35 locations described as value-oriented stores with casual fashion, denim, activewear and footwear.
In recent years, Sport Chalet has had a tough time making a profit. In fiscal 2013, it lost $3.33 million on $360.4 million in revenue. The previous year it lost $5 million on $350 million in revenue.
In 2013, Sport Chalet started exploring various opportunities to expand its growth and it was advised by Cappello Global LLC, a private equity firm headquartered in Santa Monica, Calif.
In a letter to employees, Levra said he did not anticipate any Sport Chalet locations would be closed or any jobs will be cut in the near future.
A Sport Chalet press release said the retailer would become stronger because of the deal. As part of a larger organization, it will have larger economies of scale, which it did not have as a regional retailer. It will have greater purchasing power and a greater marketing and advertising budget.
Sport Chalet has an interesting history. It was started in 1959 by Norbert Olbertz and his wife, Irene, when they bought a small ski and tennis shop in La Canada Flintridge.
To save money that first year, they slept in the back of the store.
