Introduction

In a shocking twist for outdoor enthusiasts, the Vancouver-based company formerly known as Mountain Equipment Co-op, now simply referred to as MEC (Mountain Equipment Co.), is reportedly up for sale for the second time in just five years.

History and Ownership Changes

Originally founded in 1971, MEC's financial turbulence has stirred up concerns among loyal customers. After entering creditor protection in 2020, MEC found itself sold to Kingswood Capital Management, a Los Angeles-based investment firm. It's important to clarify that this firm holds no ties to the Kingswood Capital Corp. or Kingswood Properties, which are part of Vancouver's Segal family. Since the transition, MEC has shifted from its cooperative model to a corporation, inciting reactions from its once-dedicated member base.

Current Situation

Retail analyst David Gray, who has a history of consulting for MEC, mentioned to the Business in Vancouver (BIV) that the store has been trying to find a buyer while struggling to settle its debts with suppliers. Reports from CityNews echoed these claims, revealing that an email circulated among MEC suppliers indicated the company was indeed in the hands of potential buyers. When questioned about the status, MEC spokesperson Jo Salamon remained tight-lipped, only stating that "there is no news to share."

Supplier Concerns

Adding fuel to the fire, certain suppliers have come forward, stating that MEC has been slow on payments—a red flag indicating internal operational chaos. Craig Patterson, another retail consultant, corroborated these claims, noting that industry chatter suggests outstanding invoices linger.

Management's Promises

Peter Hylnsky, the current CEO, assured BIV in November 2023 that MEC had returned to profitability. However, the reality on the ground seems starkly different. Just 14 months ago, MEC boasted 22 stand-alone stores along with three locations within Hudson's Bay Co. (HBC) outlets. Hylnsky's ambitious plans included expanding the store count to 40 by 2028, but the latest figures show only 26 locations, including just two within HBC.

Speculations and Industry Dynamics

Enthusiastic fans on social media have begun speculating about potential buyers, including the U.S.-based REI. However, recent layoffs at REI—amounting to 180 full-time and 248 part-time positions—hint that the outdoor equipment sector is facing its own challenges. Gray dismissed the idea of REI acquiring MEC, given its own internal struggles.

Future Prospects

Past talks of acquisition in 2020 included interest from private equity firms, and Gray suggests that any future buyer is likely to come from that same pool of investors rather than a strategic retail acquisition.

Financial Troubles

Financial trouble for MEC began as early as 2014 when they invested $28 million in a lavish 112,000-square-foot headquarters, later followed by a sale-and-leaseback strategy that, while freeing up capital, also masked underlying issues. In January 2020, the company made moves to downsize, indicating a reactive rather than proactive strategy.

Impact on Employees and Community

As the company flounders, the ramifications extend beyond corporate balances; there is concern for the workforce affected by these shifts. With an unclear staff count currently, Gray emphasized the human element at stake, remarking that "there's a lot of staff involved that are affected by this."

Conclusion

With MEC teetering on the edge, the next steps will be crucial not just for the corporation but for the community of outdoor enthusiasts who have cherished the brand for over half a century. Stay tuned as we uncover more about this unfolding saga.