09-24-2024, 04:37 PM
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Senior Member
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Join Date: Jun 2009
Posts: 2,233
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https://escapecollective.com/the-pro...-deep-trouble/
Quote:
As the days shorten in the northern hemisphere, many bike shops put items that haven’t yet sold on clearance. But at online retailer The Pro’s Closet, which specializes in certified used bikes and gear and liquidating new, prior-year product, this is no normal end-of-season closeout section.
For one thing, virtually everything is on sale – with a handful of specific exceptions, every new and used bike, frame, wheel, suspension fork, jersey and helmet on the site is included – often at steep discounts. Brand new bikes from Orbea and 3T are 30-50% off and Campagnolo Ekar components are listed as much as 75% under market price. And, under the sale banner on the homepage is a note in small type that reads “End-of-Season Purchases are Final.”
Further markdowns on the end-of-season sale came Monday and inventory is dropping fast – from close to 400 bikes on Friday to around 200 Tuesday, and there are similar reductions in stocks of framesets and wheels. Meanwhile, TPC has paused acquisition of any new bikes and also stopped booking service appointments at its shop. The company reportedly went through a deep round of layoffs late last week, with remaining staff told the business could close as soon as October 2.
Two former employees told Escape Collective that The Pro’s Closet is in dire financial shape and at imminent risk of going out of business. “Bottom line, if they don’t find a buyer in the next month to six weeks, literally the pieces will be sold at auction,” said one. Both cited conversations with current staff and asked to remain anonymous to speak candidly about their former employer.
TPC founder Nick Martin replied to an e-mailed request for comment by saying he would be happy to talk after October 4, but did not respond when asked why he was not available prior to that. Seth Levine, co-founder at TPC investor Foundry Group, did not respond to an e-mailed request for comment.
If the company does close its doors, it will mark one of the highest-profile bike industry failures yet in the aftermath of the bike boom that happened during the COVID-19 pandemic. A closure would shutter a key, trusted marketplace for used cycling gear in the United States and abruptly put dozens of employees out of work and looking for jobs in an industry that is itself struggling and with questions around the broader US economy.
A former mountain bike racer on Trek-VW, Martin started TPC in 2006 as an eBay store where fellow elite cyclists could sell last season’s race bikes and gear from sponsors. It eventually outgrew that sales channel and pivoted to its own web store, along the way pioneering the first true “certified pre-owned” business model in cycling retail and forging trade-in partnerships with everyone from independent bike shops to multinational brands like Giant. The business attracted significant venture capital funding, including US$52 million in a nine-month span in 2020 and 2021, and says it has sold more than 46,000 bikes in the 18 years it’s been in business.
But that pandemic-era investment haul was accompanied by large increases in staff and costs, including a content arm that acquired independent media outlet The Radavist and a move to a two-story, 137,000-square-foot warehouse, office and retail space that, sources say, was never fully used. Additionally, as the bike boom cooled, TPC fought against an industry-wide inventory glut and deep discounting.
Attempts over the last two years to put the business on firmer financial footing – which included a 15% staff reduction in October 2022 and further layoffs of undisclosed size in January 2023 and July 2023; selling The Radavist back to founder John Watson; and a January 2024 infusion of $5.5 million from existing investors – were not enough.
The Pro’s Closet has not filed a WARN notice for a mass layoff or facility closing, but federal law provides exceptions, including for smaller companies and for companies seeking new capital to stay in business. That means the company could yet find a buyer at the 11th hour and remain in business, although not likely at its current location. Escape Collective will continue to follow up on developments.
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