The Vancouver based company originally known as Mountain Equipment Co-op, later truncated to MEC, is said to be up for sale for the second time in five years.
The 1971-founded venture in October 2020 got court approval to be sold to Kingswood Capital Management after entering creditor protection. That company is a Los Angeles-based investment firm that has separate owners and no connection to Kingswood Capital Corp. or Kingswood Properties, which are holdings of Vancouver's Segal family.
MEC kept that acronym, which now stands for Mountain Equipment Co. as it is no longer a co-operative.
"I hear that they have been shopping themselves around for a while, and they haven't been paying their their vendors," DIG360 principal and retail analyst David Gray told BIV this afternoon. He did some consulting work for MEC back when it was a co-operative.
CityNews reported Jan. 10 that it had received a copy of an email from a wholesale association that was distributed to MEC suppliers, dated Dec. 27, informing them that the former cooperative is “in the process of being sold.”
BIV asked MEC in an email if it is true or not true that the company is in the process of being sold but in multiple emails spokesperson Jo Salamon would only say that "there is no news to share."
CityNews said that one supplier to MEC said that MEC was behind in paying its invoices.
Retail Insider Media owner and retail consultant Craig Patterson agreed with Gray and said that he as well has heard that MEC's operations have been struggling, and that "some of the industry chatter was that there were outstanding bills."
BIV has contacted some MEC suppliers but has yet to find one that says that MEC is behind in getting paid.
The talk of operational problems at MEC have come despite CEO Peter Hylnsky telling BIV in November 2023 that the company had returned to profitability.
MEC 14 months ago had 22 stand-alone stores across the country and three stores within Hudson's Bay Co. (HBC) locations in Toronto. Hylnsky said that he planned to open "three to four" stand-alone stores per year, increase the company's stand-alone store count to 40 stores by 2028 and then continue to grow.
MEC's website now lists 26 locations, including two in HBC stores. MEC has had only one press release in the past year, and it said that there would be a store opening in Whitby, Ontario.
Some who posted on a Reddit group in a thread discussing the alleged potential sale said that they would like U.S.-based outdoor equipment seller REI to buy MEC.
The Seattle Times reported Jan. 8., however, that Issaquah, Washington-based REI was laying off 180 full-time and 248 part-time employees.
"REI is eliminating its outdoor classes, events and tours this month as it looks to prune unprofitable parts of its business while struggling to break even," the Seattle Times reported.
Gray said that REI's own internal struggles mean that it is an unlikely buyer for MEC.
Back in 2020, when MEC was in creditor protection and seeking suitors, there were a few other unnamed private-equity firms that had expressed interest, Gray said.
"The buyer is probably going to be another equity company, with the starter list being the ones that missed out in the last go around," he said. "My guess is it would not be a strategic acquisition. In other words, it wouldn't be outdoor brand or retailer."
Executives at MEC have acknowledged that trouble started for the company in 2014, when 300 MEC workers started moving into a 112,000-square-foot complex at 1077 Great Northern Way, which cost MEC $28 million to build and was seen by some as palatial.
The building was pricy in part because MEC constructed it to the Leadership in Energy and Environmental Design (LEED) Platinum standard, which is the highest level possible in that U.S. Green Building Council-operated program.
MEC soon afterward did a sale-and-leaseback transaction to enable it to access millions of dollars in capital and pay a steady lease rate, Hlynsky said. MEC then in January 2020, just before the pandemic took hold, announced plans to sublease all 112,000 square feet in its then-six-year-old headquarters, and move into a smaller head office – one that turned out to be a stone's throw away, at 887 Great Northern Way.
The 2020 relocation was intended to save the company "maybe $2 million" per year, former CEO Phil Arrata told BIV at the time.
It is not clear how many staff now work at MEC, although BIV in an email has asked the company to provide a staff count.
"There's a lot of staff involved that are affected by this," Gray said. "Once again, we have a Canadian-headquartered business that is under duress. It's not a good time for any of the people involved who work there."
