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Wells Fargo Provides $95MM to Versa’s Newly Formed Vestis Retail Group

February 01, 2013, 08:06 AM

Versa Capital Management announced the creation of Vestis Retail Group, a new retail platform that comprises two retailers owned by Versa: Bob’s Stores (Bob’s) and Eastern Mountain Sports (EMS). EMS is the second largest U.S. multi-channel retailer of human-powered outdoor sports apparel and equipment. Bob’s sells value-oriented footwear, apparel, work wear and accessories. As part of Vestis, Bob’s and EMS will share certain operational functions and enterprise resource planning (ERP) systems, but will remain separate and distinct retail brands in stores, merchandise and online.

The capitalization and working capital requirements of Vestis will be supported by a new $95 million revolving credit facility provided by Wells Fargo Bank, N.A. The Vestis platform has over 3,200 employees and nearly $500 million in revenue both online and through over 100 stores in 12 eastern states.

Mark Walsh, CEO of Bob’s and a Versa Principal, has been named CEO of Vestis, inclusive of EMS. Will Manzer has stepped down as CEO of EMS, effective immediately; he will serve as a consultant to Walsh during a transitional period. Working closely with Walsh to oversee EMS’s day-to-day operations in Peterborough, NH will be Garry P. Herdler, interim CFO of Vestis, inclusive of EMS.

Additionally, EMS, a 68-store outdoor retailer in 12 eastern states, is closing its distribution facility and several other back-office support functions in Peterborough, NH. EMS currently plans to maintain its merchandising, product design, call center and web operations in Peterborough, NH, and its climbing, paddle and outdoor schools in New England.

The moves are designed to improve EMS’s operating efficiency, inventory management and capacity to invest in the continued development and success of its brand. The company’s distribution function will be consolidated within Bob’s existing distribution facility in Meriden, CT. These changes will commence immediately and will be finalized over the next five months. Approximately 110 EMS employees will be affected. Bob’s and EMS will continue to pursue individual strategies focused on maximizing the potential of both businesses separately. Vestis is ready to support affected employees with work fairs and job placement opportunities, such as exploring local employment options and opportunities within existing Bob’s and EMS facilities.

“The steps we have taken at EMS are difficult ones, but we believe they are in the best long-term interests of the business,” said Walsh. “We thank all EMS employees for their hard work and dedication, and we are committed to supporting the affected employees in seeking new opportunities both within and outside of the company. Will’s product and industry knowledge are superior, and he will be of great help to me as I work with the EMS team to ensure the strength of the EMS brand with outdoor enthusiasts. The Vestis platform will enable us to improve the operations of Bob’s and EMS while growing each business independently with separate customer and brand strategies.”

The developments at EMS will have no impact on the company’s existing stores, which remain fully operational. EMS continues to employ approximately 130 people in its stores in New Hampshire, as well as over another 1,000 people in its stores outside of New Hampshire, and EMS will continue to employ approximately 110 people in Peterborough, primarily those who work in the retailer’s customer-facing operations.

“Versa’s investment and active involvement have enabled EMS to continue as an independent retailer with opportunities for future growth, building on our long tradition of success in the outdoor category,” said Mr. Manzer. “I have enjoyed my time as the leader of this great company, and I’m ready to help Mark move EMS forward.”

“We believe the retail industry for outdoor apparel and gear holds great promise, and our firm has been active in the space for many years,” said Greg Segall, CEO of Vestis’ controlling shareholder Versa Capital. “We are committed to ensuring that each of our companies in the space – including Bob’s and EMS – have the resources and infrastructure to achieve sustainable success in this dynamic sector over the long term.”

Bob’s, founded in 1954 and based in Meriden, CT, is a value-oriented retailer with locations throughout the Northeastern U.S. It offers the entire family a wide range of brands at affordable prices in casual fashion, denim, active wear, team wear and footwear.

EMS began in 1967 when two active individuals in Massachusetts opened a store that would address the needs of fellow outdoor enthusiasts. From that first store in Wellesley, MA, the Peterborough, NH-based retailer today operates 68 stores in 12 eastern states.

Philadelphia-based Versa is a private equity investment firm with over $1.2 billion of assets under management focused on control investments in special situations involving middle-market companies where value and performance growth can be achieved through enhanced operational and financial management. Versa’s portfolio includes Bob’s Stores, a northeastern apparel retailer that was recognized as Connecticut’s Retailer of the Year, Avenue Stores, a chain of trend-right, multi-channel stores offering affordable fashion for real size women, and Black Angus Steakhouse, a chain of family-oriented steak restaurants in the western states.

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