Erehwon shutting down, liquidating inventory

Chicago-based Erehwon Mountain Outfitters, with five locations in Illinois and Wisconsin, will permanently close its doors within the next 30 to 60 days. After an aggressive campaign to reorganize and to refinance the business, the outdoor industry institution that celebrated its 30th anniversary less than a year ago was sent to liquidation on Jan. 21. Plans to shut down all operations were announced to staff and creditors on Jan. 23.

“We wanted to limit the exposure of our vendors to any additional risk,” said CFO Jerry Seyffert. “We had already begun canceling orders scheduled for spring delivery. Assuming additional debt for six months through a period of low cash flow would have made matters worse.

“We just couldn’t see going though another season without snow,” said Sunday Park, accessories buyer.

Ironically, 3 inches to 4 inches of snow fell in Madison, Wis., and Chicago on the day the announcement was made.

“I knew we were going through some tough times,” said Jim Rivera, manager of the Erehwon store in downtown Chicago and a 15-year Erehwon employee. “I assumed that we’d close a few locations, but not go out of business.”

Like all the other Erehwon employees, Rivera said he was caught by surprise. Although the liquidation plan has not yet been finalized, an estimated number of over 200 Erehwon employees and managers have been told they can expect to be out of work within the next two to three weeks. There has been no discussion of severance packages for any employees.

“I don’t have much faith in what’s going to happen next,” said Rivera.

High Ridge Partners, a Chicago-based liquidation company, will oversee the sale of Erehwon’s remaining merchandise. Signs announcing a going-out-of-business sale could go up at all locations by Feb. 1, said Erehwon managers.

“It’s a shame,” said Michael Fowler, owner of Chicago competitor Uncle Dan’s. “They’re good people. I really hate to see them go this way.”

John Hutchinson, owner of Fontana Sports in Madison, said, “I was surprised when I heard the news, but I should have suspected something. We carry a lot of the same brands, and they’ve been doing a lot of discounting over the last six months.

“This is going to be bad for the industry,” Hutchinson added. “A lot of manufacturers and local reps, people I know, rely on a business the size of Erehwon. I feel especially sorry for the people who work there.”

The Erehwon branch in Madison is the second outdoor specialty retail store to close in that town since the first of the year — fly-fishing specialist Madison Outfitter’s closed earlier this month.

SNEWS View: Three consecutive mild winters, coupled with a lagging economy, has taken its toll on the outdoor industry and Erehwon is but the latest to fall. The announcement that the company would shut down indeed marks Jan. 23 as a sad day. Despite its roller coaster ride over the last decade, Erehwon was a store that competitors admired for its heritage. While there are many reasons for the collapse of Erehwon, we’d agree with several area retailing competitors who said they felt Erehwon was undercapitalized — when the company opened new stores in Chicago two years ago, that growth likely couldn’t be sustained. Still, the company was generating $12 million to $15 million in gross sales according to insiders, which are now up for grabs. That could mean a good opportunity for another retailer who is ready to fill the void. In March, Indianapolis-based Galyan’s, with more than 40 locations, will open an 80,000- to 100,000-square-foot store just north of Madison in Middleton. With deeper pockets and the ability to wait until the winter weather and the economy improve, Galyan’s will likely reap a chunk of Erehwon’s lost fortune.