(BRAIN) — The founders of Kona Bicycles have repurchased the brand they sold to private equity-backed Kent Outdoors in December 2021.
“We believed that the new owners would carry our vision forward and continue to build great bikes, employ great people, and deliver on the promise of quality, fun and a little weirdness that had defined Kona for so long,” co-founders Jake Heilbron and Dan Gerhard wrote in a letter to the industry they shared with BRAIN readers Monday morning. “Unfortunately that plan unfolded quite differently, so now we’re buying Kona back,” they said in the letter.
In the letter and in a press release that went out Monday morning, the new owners said they would bring back a lot of familiar faces at the brand and return it to its roots. They also said the brand would remain centered around its longtime offices in Ferndale, Washington, and North Vancouver, British Columbia.
“With this return to being rider-owned and operated, we’re doubling down on our unique brand legacy and getting back to some basics,” they said in the release.
While the new owners said they would pause consumer direct sales — on the company website, consumer sales were turned off soon after the sale was completed on Friday. They also pledged to avoid deep discounts like the buy-one-get-one promotions Kona ran last year. But they said they expect to offer bikes at aggressive prices, especially in the short term as they work through excess inventory. But now, the sales will go through bike shops.
“Most of us started out in bike shops, and in our eyes, IBDs are our strongest advocates and allies. Healthy retailers are integral to making sure that Kona fans everywhere experience the ride of a lifetime,” they said.
The troubles
Like many or most bike brands, Kona struggled in the post-pandemic market. Kona perhaps floundered more than most. The new owners destroyed dealer confidence with a consumer-direct and omnichannel sales program that dealers said offered them little margin. Once the direct sales program got rolling, Kona undercut dealers with deep discounts including the infamous BOGO promotion, in which at least some bikes were shipped to consumers unassembled, as dealers receive them. Some dealers tell BRAIN that Kona became uncommunicative and customer service suffered under the new owners.
Kent's lack of confidence in Kona — or in the bike market in general — reached a head when management told employees to break down their display at the Sea Otter Classic last month, even though employees were already there and the expo space was paid for. Several days later Kent announced that it was seeking a buyer for Kona.
The company’s remaining brand portfolio includes HO/Hyperlite, Connelly, O’Brien, Liquid Force, Onyx, Aquaglide, Barefoot/Fatsac, BOTE and Arbor Snowboards. Traditionally based in Ohio, Kent relocated its headquarters to Utah last year.
In previous interviews, Heilbron told BRAIN that the partners decided to sell to Kent in 2021 largely because they trusted CEO Ken Meidell, an outdoor industry veteran and mountain biker who joined Kent in 2020 and had negotiated its sale to Seawall.
“There is a little weirdness with a lot of bike companies, Kona’s no exception; we like to think we have some quirkiness going on,” Heilbron said in a 2022 interview with BRAIN. “That’s one thing we recognized right away with Ken. … Because you talk about a CEO and right away everybody thinks of someone in a power suit sitting in an office in Manhattan and Ken is pretty much the virtual opposite of that.”
Meidell left Kent in 2023, however, and Kent and Kona struggled with leadership. Kent board member Kelly McCarthy stepped in as interim CEO for a time, and Dave Hugar, who is president of BOTE, also served as Kona’s interim global leader. Finally, in February Kent hired Lee Belitsky as Executive Chairman and President. Belitsky had recently left Dick’s Sporting Goods, where he worked for 24 years, most recently CFO.
While Belitsky was not bullish on the bike industry, seeing more opportunities in water sports, Heilbron called him “a straight shooter” and said he had managed the sale back to the co-founders surprisingly quickly.
What’s next?
Heilbron said the sale went remarkably quickly and that he doesn’t have answers for a lot of questions; the company is still fleshing out new dealer agreements and pricing structures, for example. They are determining how to provide warranty service to customers whose bikes were not assembled professionally. There’s a lot to do.
Related news:
- EXCLUSIVE: Kona Bicycles' letter to the industry
- Kona press release: Kona 3.0
- Kent press release
- Where's Kona? Brand sets up then breaks down at Sea Otter
- Kent Outdoors looking for buyer for Kona Bikes
- Kona Bicycles to stay in Bellingham as parent Kent Outdoors moves HQ to Utah
- Retailers unimpressed by Kona's new D2C program
- Kona’s new owners look for growth
- Kona Bicycles sold to Ohio outdoor group
- Kona's Jake Heilbron and Dan Gerhard: 'This boom will have a longer trajectory than the 10-speed boom'
