Zumiez Makes $7.2 Million Bid For Active
josh hunter
- May 18 2009
- 37 comments
On May 15, The Active Wallace Group (dba Active Rideshop) made a motion for an order of approval of the sale of substantially all its assets to Active Acquisition, Inc., a wholly-owned subsidiary of Zumiez, Inc.
The terms of the motion state that Zumiez would purchase all of Active’s inventory for less than market costs, as well as pay $100,000 per store acquired. At the time of filing Chapter 11, Active operated 21 stores.
Zumiez, Inc. (ZUMZ) owns 350 stores in 31 states. The company’s sales and net income for fiscal year ending 2009 were $408.7 million and $17.2 million respectively. According to the court documents, as of January Zumiez had more than $33 million in cash.
The terms of the proposed sale are as follows:
Based on the offer made by Zumiez, Active proposes to sell its assets for a total consideration of up to as much as $7.2 million cash, depending upon the outcome of Zumiez valuation of inventory and determination of number of stores to acquire. The total consideration offered to be paid by Zumiez in this case is based on the following formula:
1.) Inventory valued at the lower of cost or market, as determined by an appraiser hired by Zumiez;
2.) $100,000 per store to be purchased by Zumiez; and
3.) Assumption of gift card certificates up to $1.3 million, with total consideration to be adjusted if gift card liability is in excess of $1.3 million.
According to Active’s books, the cost of all its inventory was approximately $5.2 million as of March 30, 2009. Because the inventory is dates, Active believes the inventory to be worth significantly less than cost. Active expects to determine the market value of its inventory by June 10, 2009.
Zumiez has expressed interest in 20 of the 21 stores, and the final bid will be filed on June 22, 2009.
Another stipulation of the deal is that Zumiez has requested to be paid a break-up fee of $250,000. This fee covers the costs associated with moving on a deal of this size in such a short amount of time.
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May 19th, 2009 at 3:43 am
that's peanuts.
May 19th, 2009 at 5:30 am
well when you are bankrupt with old stock, you get peanuts. Thats what happens when you get greedy
May 19th, 2009 at 6:01 am
sorry to rain on the hate parade ….but the deal is not happening….Zumiez will not be buying active.
May 19th, 2009 at 6:38 am
I'm a little surprised by that "April 15" date. They've been talking for a while. I agree that $7.5M seems like a steal…
May 19th, 2009 at 7:06 am
What happened to when skateboarding was about skateboarding and the local shop? Not a bunch of businessmen and crooks trying to cook the books to become as rich as possible as fast as possible.
Active, Zumiez, Industrial, and every other mall shop need to go out of business and make room for the local retailer again.
May 19th, 2009 at 2:39 pm
i love life
May 19th, 2009 at 3:00 pm
does this mean nike will get the 2 mil that active owes them. What a bunch of greedy peeps. What big store will be next.
May 19th, 2009 at 4:37 pm
Just one shop buying another one because of over extension and bad management. It is a steal but which one is better they are both mall stores so the steal is getting out if your Active.
May 19th, 2009 at 7:08 pm
if you are not going to a legit shop then you are missing out, I feel bad for kids that have no other options, having a real shop, knowing the owner and being a loyal customer is a nice little slice of life that I love, whether you are 9 or 39, if you are talking to some mall worker its just not the same, they don't know and more likely could care less
May 19th, 2009 at 7:41 pm
No it does not. When you file a chapter 11 bankrupcy it freezes all debts and assets. Basically the vendors that are owed cannot by law collect the debt. They will get pennies on the dollar for the debt that is owed to them as approved by the commitee.
May 20th, 2009 at 3:07 am
Kudos to you Wade! Well said.
May 20th, 2009 at 6:03 pm
just when you thought the smaller, real skateshops where gonna get some love again, here comes another greedy corporation to the rescue. the saddest part is that all the major companies in the industry itself let's it happen…
May 20th, 2009 at 9:19 pm
Active is only the beginning of fundamental changes in our business. The wholesale to retail business model is dying a gradual painful death, lots of blood already visible. The next 12 months will reveal MALL retailers operating on a 50% GP model (I'm throwing in around 20% vertical product mix just to maintain an average 50% GP) are going to end up out of business. If your in a MALL it's low 60's GP just to tread water. Good luck buying overpriced surf brands and trying to make a buck at those margins. The American consumer has change their motivation to buy in every way. The top 10 brands in ASR will need to focus on a vertical and online approach going forward, just to survive.
May 20th, 2009 at 9:40 pm
it all sucks!!! its a sign of the times. "SUPPORT YOUR LOCAL BUSINESS"
May 21st, 2009 at 4:06 pm
I don't buy that. I think the vertical model will backfire. No retailer wants to support companies that want to compete with them.Look at quick, How well has that worked for them? Also the online thing is not so great. Communities are pushing the buy local thing. We want a mainstreet, america wants it and wants it now, not to mention they want to try it on.
I do agree that retail is changing. The days of just owning a store and not working the floor are gone for now. People want to support stores that owners work in, they need that connection.
Active got greedy, its pretty obvious, and when you get greedy you jeopardize the whole operation. I don't feel sorry for them or nike
May 23rd, 2009 at 3:10 am
Are you people serious…..Active has given out so much money in free product, and let alone discounts. Every kid out there thinks they deserve a discount or some kind of free product. They are not selling out…look at the prices they were able to offer for so long. Many kids would be out of a deck if it wasn't for the low prices. Companies that make a lot of money keep sports going, such as REDBULL ….are they sell outs? If anyone wants to live a professional career in skateboarding, or snowboarding someone has to pay the bills….GL on having a sport go somewhere without money being involved, for many instances its for the better.
May 25th, 2009 at 10:52 pm
excuse me but didn't Active win BEST in Cal last year ? answer is YES!!!!
May 26th, 2009 at 2:25 pm
I am still so surprised with the local vs. mall debate. I love local shops….. Froghouse, Furnace Seal Beach etc. I always try to shop at those places and can't remember the last time I made a purchase at Zumiez. HOWEVER, the people on this forum, who can't pull their head out of the sandbox and realize that the "action sports" lifestyle is bigger than just the local shop just amaze me. You think that shops like Froghouse, Furnace, OneWay, Surfside exist in middle America ? There can only be so many shops on the East and West Coasts. These companies have chosen a path to grow from one shop to two, three etc. You're local shop owner chose not to…. Both paths are good in their own right and can coexist. Everyone mentions greed….. really ? It's greedy to want a bigger company and make more money ? I thought that was the foundation of capitalism. As far as I know, the Zumiez management staff treats their employees well and provides a path of success with their $100K program. Brands need both "core" shops and "mall" shops. If any of you haters on mall shops have friends who are reps in the industry why don't you re-direct your anger and ask your rep friend's company not to sell to Zumiez….. I'd love to see their reaction. Stop being so narrow minded.
May 26th, 2009 at 11:55 pm
Agreed!
May 27th, 2009 at 3:42 pm
thats funny, My point on greed is that more times then not, people try to grow into a chain, and they end up risking it all. I think thats what happened to active. As far as reps, us store owners realize there is pressure from sales managers to grow, and they are very short term minded. If they for once looked down the road they would realize you have to be smart about the growth. Go into a mall and you see the same merchandise and 5 different store. What happened? The brand just got watered down, and the roots are gone. Look at all the brands who have lost it.
On another note those mall stores don't care about the industry, they would sell razor scooters if they could, Specialty shops won't sell out like that. Go into the mall and check it out before you think you know it all.
As far as narrow minded, I would call it passionate. Do you think mall stores launch brands? Watch there will be chain stores closing doors.
May 27th, 2009 at 7:25 pm
People forget that the whole reason anyone opens a business is to make money. I have worked at both a small shop and at a Zumiez and have found both experiences to suck. The Zumiez 100k amounts to nothing more than a carrot on the end of a stick because reaching that goal doesn't get you anything more than a chance at the trip. And your chances are affected by if your manager wants you to go or not. I've also witnessed a small shop do a little side dealing to make more money like selling product on ebay and exporting goods. Change the status quo with your wallets. Shop where is best for you, but think before you buy. I guess no matter what you have to pay for your lexus and your nanny either way…
May 29th, 2009 at 6:15 pm
bitter huh, must have been a lame shop
May 31st, 2009 at 4:33 am
Acitve Or Die!!! Fuzz Zumiez.
June 1st, 2009 at 10:37 pm
i love lamp