PHILADELPHIA (BRAIN) — Advanced Sports Inc., the distribution arm of Advanced Sports Enterprises, is now ready to return to full-scale business, selling Fuji, Kestrel, Breezer, SE Bikes and its other brands to U.S. retailers.
BikeCo, a partnership of Tiger Capital Group and Advanced Holdings, bought ASI at a bankruptcy sale earlier this month for $16.1 million. ASI had continued operations during the bankruptcy, but its long-term fate had previously been unclear. It is now being operated as a going concern, separate from Performance Bicycle, Nashbar and other parts of ASE.
Before the bankruptcy, ASI did roughly $100 million in sales each year and was profitable, according to ASE executives, who said debt from the acquisition of Performance, combined with declining sales in the stores, led to the bankruptcy. Performance and Nashbar liquidated much of their retail inventory in sales that will continue until about March 1 (Performance and Nashbar were purchased by California e-commerce company AMain.com for $1.2 million).
During the liquidation ASE held back 2019 bikes and some other "evergreen" inventory, providing the new owners of ASI with two warehouses full of in-season inventory ready to ship, said Ryan Davis, ASI's interim CEO.
Davis is a director at Tiger Group LLC, well known as a large-scale liquidator that's been involved with the liquidation of bankrupt retailers including Toys R Us and Circuit City. But in an interview with BRAIN, Davis said Tiger Group intends to operate ASI. Said Davis, "Tiger is also known for financing the restructuring and turnaround of companies like PPS Partners, Aly Energy, and Quantum Foods." Davis further noted that "ASI is a strong business. We want to maximize the value and give its leaders an opportunity to succeed."
Those leaders include longtime ASI executive Karen Bliss, who has been named president. She also remains chief marketing officer. ASE's former CEO, Pat Cunnane, is leaving the company after a transition period of several weeks.
Davis said he is an avid road cyclist who frequents IBDs in the Boston and Los Angeles areas. "I grew up as a bike enthusiast. " he said. "I have friends who own bike shops and I have a great appreciation for what they do. I know that as a consumer, you choose the shop owner before you choose the bike."
Davis said he was aware that the liquidation sales at Performance had devalued the ASI inventory of its other nearby dealers.
"That was the worst part about the whole process," he said. "It was not a good short-term result for the dealers in proximity. The flip side is that we will have those concerns behind us as we come into the bike season, and there is an opportunity for dealers to grab significant market share as the Performance stores wind down. Our goal is to be a strong partner to the dealers to help them achieve that."
Bliss said that in addition to the 2019 models that were held back from liquidation sales, new models will be launched soon.
"Some of our product launches were on hold during the bankruptcy," Bliss said. "We are expecting product to start flowing in soon so we can focus on some of our new road and mountain technology."
She said ASI will honor warranties on its bikes sold before and during the bankruptcy. She also said Fuji will be sponsoring several teams this season, including TIBCO and some mountain bike athletes. SE Bikes also will continue supporting its #bikelife riders.
ASI is continuing to operate out of its longtime headquarters in Philadelphia. ASI is leasing the Philly building from K&B, a real estate investment firm that acquired the ASE real estate from the bankrupt company. Before the acquisition, ASI employed approximately 80 people, the majority of whom were in Philadelphia. Representatives from ASI noted that the vast majority of staff was retained as part of the going concern. BRAIN reported earlier this month that seven ASI employees were laid off.
Tiger Group's partner in BikeCo is Advanced Holdings. George Hsu, the owner of Advanced Holdings, told BRAIN in a statement, "Advanced Holdings is a Hong Kong-based company focused on sports-related investment opportunities. In addition to the joint purchase of ASE, Advanced Holdings is the largest shareholder of Bike Innovation Co. Ltd., which is a Hong Kong-based startup for e-bike power systems."
