Prior to Outdoor Retailer Winter Market, SNEWS® began hearing that Adventure 16 was on the market and looking for a buyer for both the retail and wholesale operations.
We talked to John Mead, president of Adventure 16, at Winter Market who confirmed to us that the company was, in fact, seeking an equity partner, in part to take a bank that was charging the company very expensive loan rates out of the equation.
“A16 has hired Silver Steep Partners to explore the possibility of and guide the process of bringing in an equity partner. Silver Steep is casting a wider net to prospects to ensure that A16 finds the best possible match,” Mead told SNEWS. “There has been no decision to sell the company, although the search may lead to that if it is in the best interest of A16 shareholders.”
The decision to bring in an equity partner comes on the heels of a particularly challenging, though, we were told, still profitable, year for the venerable Southern California-based retailer.
In late 2008 and early 2009, the company was forced to close several under-performing stores in order to reduce overhead and expenses. In December 2008, it closed its 12,000-square-foot Torrance, Calif., store, which had been open for just three years. On Feb. 23, 2009, it shut the doors of its Costa Mesa store, based in the CAMP shopping center, ending Adventure 16’s 21-year tenure in that community. (See the March 6, 2009, SNEWS story.)
The retailer’s San Diego, West Los Angeles, Tarzana, Solana Beach and Oceanside locations are now all operating under reduced rents negotiated with landlords. In addition, expenses were trimmed with payroll reductions and improved operational efficiencies, Mead told us in mid-2009.
Wholesale continues to be a bright spot for the company, Mead said, in large part because, “when things are tight and retailers want to turn inventory faster, they are turning to us to help them do that.”
Insiders have told us that there has been good interest in investing in Adventure 16 since the company began circulating its book — in large part because of the reputation of the retailer and its business history.