BY NICOLE FORMOSA
BOSTON, MA—In its decades long history in the ski and bike business, Ski Market reached iconic status with more than 20 locations in the Northeast. During its prime, it operated Sports Authority’s ski shops in addition to its own and moved enough Raleigh and Marin bikes to consistently rank among their top dealers in the country.
“We were at one point in the NBDA’s top 100. We won SIA’s National Ski Retailer Award for three years. It was an icon in the ski industry. At the high point our volume was above $40 million in retail sales,” said Walter Driscoll, who worked at Ski Market since its inception in 1971, and was the bike buyer before being laid off last August.
Ski Market’s legacy ended on Dec. 29 when the retailer, owned by the Ferguson family its entire existence, filed for Chapter 11 bankruptcy protection citing financial problems that were exacerbated by the economic downturn and resulting slowdown in consumer spending.
A final sale auction of Ski Market’s assets was scheduled for Feb. 5.
Regardless of whether a potential new owner continues with the existing business model, the bankruptcy no doubt closes the books on an independent family operator with retail roots five decades deep.
“After having done business with them for most of my career, that’s the hardest part for me to swallow honestly,” said Steve Meineke, president of Raleigh America, which is owed nearly $125,000 by Ski Market. “I’m hopeful they can find some solutions.”
Ski Market’s beginnings can be traced back to Wellesley, Massachusetts where Bob Ferguson opened St. Moritz Sports in 1958. Thirteen years later, Ferguson partnered with Tom Richardson and opened the first Ski Market on Commonwealth Avenue in Boston. At the time, specialty high-end shops dominated the ski retail scene, and Ski Market filled an underserved niche for discount skis. That same year—1971—the owners diversified by adding bike sales into the mix to capitalize on the height of the 10-speed craze.
They started with the Gios Torino line then began importing steel Mercier and Jeunet bikes from France. At one time, Richardson brought in containers of bikes from France and sold them under a private label.
By the mid-1980s, the 10-speed fad had subsided and mountain biking began gaining popularity. Ski Market picked up Diamondback, Raleigh and Scott (during its first go-around in the U.S. market). It eventually sold Marin, Jamis, Haro and Masi as well.
Ski Market catered to recreational and family cyclists and students selling mostly entry- to mid-level bikes. Bike business was steady, but sales never approached the numbers netted from that of snow sports equipment.
“I would say at its high point, bikes probably represented 20 percent of the volume,” Driscoll said. “The thing that hurt most was the name Ski Market over the door. It was tough to invite cyclists in.”
Another challenge, particularly in the highly competitive Boston market, was finding lines of bikes that Ski Market could sell in all its locations without crossing into another shop’s territory. And Ski Market could never crack the top tier because brands like Trek and Specialized were locked up by stronger IBDs.
Still Ski Market sold well the brands it did carry. It was Marin’s top New England retailer, a top 10 Haro dealer and sat on Raleigh’s Heron Council for its top dealers. In 2008, the bike business soared—Ski Market saw a 30 percent increase in sales, ringing up more than 5,000 units, Driscoll said.
But, that boost wasn’t enough to pull Ski Market out of the financial dire straits it had fallen into due to a combination of management problems and several difficult ski seasons, and bankruptcy loomed.
According to an affidavit filed in bankruptcy court by Andrew Ferguson, Ski Market’s president and chief executive officer, the company had operated at a loss for the past several years and had already closed eight of its 15 stores. In fiscal year 2009—April 1, 2008 through March 31, 2009—Ski Market banked gross sales of $22.5 million. From April 1, 2009 to mid-December, sales had reached just $6.9 million. Ski Market had been actively seeking a buyer since last November.
“It is [sad],” said Jeff Cavicchi, a buyer at Maine’s Downeast Bicycle Specialists, one of Ski Market’s distributors for P&A. “I grew up in Massachusetts where they’re based. They’ve been around a long time. Their stores are landmarks. It’s sad to see them go, but everybody knew this was coming too. It wasn’t a big surprise. Things like this happen and we were prepared for it. We knew it was coming and we emerged from it relatively unscathed.”
Ski Market was among Downeast’s top 15 customers, but its debt was paid nearly up to date at the time of the bankruptcy filing, Cavicchi said.
Other bike industry vendors had more trouble with receivables. Jamis sent Ski Market to collections five months before the company filed bankruptcy.
Steve Glazer, vice president of sales and marketing for Marin Bikes, which is in the hole $93,350 to Ski Market, said it wasn’t unusual for Ski Market to fall behind on payments to summer sports vendors and catch up after cash started coming in with the ski season, but that didn’t happen in 2009. Marin had been working with Ski Market on a repayment solution for some time, Glazer said.
“Fortunately we increased our bad debt reserves the last couple years in anticipation of a situation like this. We’re going to come out of this just fine having seen the writing on the wall, but this is a big hit,” Glazer said.
Ski Market also owes $195,253 to Scott USA; $111,805 to Smith Optics; $67,662 to Oakley; and hundreds of thousands of dollars to ski vendors. It owes $5.2 million to four secured creditors—South Shore Savings Bank ($4.2 million), The Burton Corporation ($426,409), Tecnica Group ($437,954) and Bell Sports, Inc. ($145,016).
Secured creditors have first priority on funds from the sale of Ski Market’s assets, but, in his affidavit, Ferguson said he doubts the sale will cover any more than the debt to South Shore Savings Bank.
While seeing a once strong company falter is unnerving, many said they believe it’s an isolated incident and not indicative of future failings among retailers who rely on winter and summer sports to survive.
The biggest issue could be finding another retailer to pick up the volume lost with Ski Market. Marin has already signed on with Eastern Mountain Sports, but others still have work to do.