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Economy Puts Ladera Out of Business

Published April 7, 2009

LADERA RANCH, CA (BRAIN)—Ladera Cyclery closed its doors on Sunday after more than four years in business. The Orange County, California, shop fell victim to a combination of factors including plummeting sales in February and March, low cash flow and sky-high rent.

“It’s been great. I love the cycling community and all the people involved. It’s a sad day, but at the same time, there’s a silver lining. Maybe I’ll get to ride my bike a little bit more, do some things I enjoy and maybe we’ll resurface again,” said owner Jeff Davis, whose shop employed five part-time people at the end.

Ladera Cyclery was located in the upscale Mercantile West shopping center adjacent to the Ladera Ranch planned community, which has been hard hit by the housing crunch, a factor that also may have played a role in the sales downturn.

The biggest issue, though, was Davis was paying $16,000 a month to rent his 3,150-square-foot space. When money started getting tight late last year, he arranged with the landlord to give back half the space in order to lower his rent.

After Davis cleared out the space, the landlord agreed to take it back only if Davis signed a two-year extension on the occupied half at the same monthly rate.

“It just didn’t make economic sense. I could’ve moved the shop to a location managed by a different company for $1.50 per square foot less, but I didn’t have the cash flow to do that or to break the lease,” Davis said.

Davis tried to play hardball, but the landlord wouldn’t budge and filed a lawsuit against Ladera to vacate the unit.

Davis said he’s not sure whether a reprieve from his landlord would’ve been enough to weather the storm; sales in the first quarter of 2009 were down 70 percent from 2008.

Ladera carried Cannondale, Felt, Scott and Electra.

Some of that was due to missed sales because Davis couldn’t have enough of the bikes in stock that were turning due to limited cash flow and customers didn’t want to wait a few days for Davis to order the bike. Also, foot traffic in the shopping center was way down.

“Location, location, location. The center was great when it was great, but when it got bad, it got really bad,” Davis said.

Davis had implemented various cost-cutting measures over the last few months including closing on Tuesdays, reducing hours on Sunday, not staying open later with the time change and slashing the advertising budget, but it wasn’t enough.

Customers supported Davis until the end, buying reduced-priced inventory just to help him out.

“Everybody hates to see it go,” said Davis, who plans to now return to the corporate world. Davis worked for Siemens for 11 years before opening Ladera Cyclery, and has a new opportunity with a different company.

Davis said he would continue organizing an annual grand prix race in the Ladera Ranch neighborhood and maintain the shop’s popular cycling club.

His competitors have stepped in to help in the wake of Ladera’s closure. Revo Cycles in Dana Point will take on warranties for Cannondale bikes and Rock n’ Road will handle warranties for Mavic wheels.

—Nicole Formosa

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