The board of directors for Mountain Equipment Co-op, Canada’s largest consumer co-operative, says it has unanimously approved a deal for a private investor to acquire MEC’s assets, including the majority of its retail stores.
The Los Angeles-based Kingswood Capital Management is buying the outdoor goods retailer through the Companies’ Creditors Arrangement Act (CCAA) — legislation that allows financially troubled companies to restructure. Financials details of the transaction weren’t disclosed.
Last year, the retailer detailed financial problems caused by slow sales, inventory backups, supply chain problems and ever-increasing online competition. The retailer lost $11.487 million in 2019 on sales of $462 million, according to financial statements audited by KPMG and posted on MEC’s website.
MEC said the acquisition is necessary to ensure a future for the retailer and that its financial struggles had been exacerbated by the disruption of the COVID-19 pandemic.
MEC’s board chair Judi Richardson called it a “difficult decision” in a release.
“Despite significant progress on a thoughtful turnaround strategy undertaken by new leadership, no strategy could have anticipated or overcome the impact of the global pandemic on our business,” Richardson said.
“Today’s announcement, including the transition from a co-operative structure, is creating a positive path forward for MEC.”
5 million members
The Vancouver-based outdoor gear and clothing retailer was formed in 1971. It is Canada’s largest consumer co-operative with over five million members.
MEC has successfully obtained court protection under the CCAA proceedings. This will allow MEC to continue operating its retail business while the acquisition is completed.
The sale is still subject to court and regulatory approvals but is expected to close by the end of the year.
At the end of the transaction, MEC will be a privately-owned company.