Mountain Equipment Cooperative, Canada’s largest outdoor retailer, founded in Vancouver in 1971, has been losing millions in sales over the past few years. In 2018, after reporting they lost $11.5 million at their 22 stores compared with 2017, they spent millions more restructuring the company. Inventory had been piling up and sales weren’t close to relieving the burden, with online retail kneecapping the Canadian outdoor giant. COVID-19 has been a boon for some outdoor retailers, but less so for those with heavy brick-and-mortar presences, and the economic slowdown caused by the virus pushed the co-op even further into the red.
And now MEC has announced the final blow. Their board revealed this week it unanimously approved a sale to Los Angeles-based Kingswood Capital Management.
“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,” said MEC’s board chair Judi Richardson.
The acquisition will allow MEC to continue using the name and the brand, Richardson has explained.
New CEO Eric Claus says the plan is to keep at least 17 stores open and to retain 75 percent of the staff.
5 million people have signed on as MEC members, and paid $5 for one share in the company. Many have expressed a desire to have their share value of $5 returned, though Claus has explained that isn’t likely to happen.
Some members have reacted with more than mere disappointment in the announcement.
Paul Finch, an MEC member, has started a Change.org petition to save MEC as a co-op, explaining that the sale to private equity came “without the permission of the MEC membership, or any kind of meaningful consultation.”
Some members have also pointed to the bylines of the co-op that allow co-op members to invoke a special resolution to remove board members, which, at least in theory, would allow MEC members to torpedo the deal.
A court must still approve the final sale, but it’s likely to go through by the end of 2020.
Quite a run for the co-op. In 1971, they hit the ground with six members and $65 in operating capital. Their first “catalog” was a single sheet of paper with products typed out that they taped to a bulletin board in a college campus student union building.
But by 1990, fully one percent of the Canadian population was a MEC member. Growth in members continued from there, as did the number of stores. The past decade, however, saw blow after blow begin to hobble the financial foundation of the brand.
“It’s easy to talk about numbers and stores, but it’s people and it’s lives. Families. It’s a very emotional thing,” Claus said. “It’s obviously going to be a difficult time.”
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