The parent company of the Chapel Hill-based bicycle retailer Performance Bicycle has filed for bankruptcy protection — a choice that will lead to the chain closing a large portion of its stores across the country.
Advanced Sports Enterprises, a Philadelphia company that bought Performance Bicycle just a little more than two years ago, filed for Chapter 11 bankruptcy protection on Nov. 16. The company said it took that action “to restructure and better position itself for future success,” according to a release.
Advanced Sports CEO Patrick Cunnane said in a statement that bankruptcy will eventually lead to store closures and layoffs.
“While ASE is undergoing the Chapter 11 process, we will continue with business as usual; orders will be fulfilled and Performance Bicycle stores will continue operating,” Cunnane said in the statement. “... Employee layoffs and store closings are inevitable, but at this time I do not have enough information to announce those plans.”
The source of the company’s financial woes since the merger has been sales at its physical retail operations. Along with Performance Bicycle, ASE also owns the bike brands Fuji, Kestrel, SE, Breezer Bikes and Tuesday Cycles as well as the retailer Bike Nashbar.
Cunnane said sales of Fuji Bikes, Kestrel Bicycles, Breezer Bikes, and Tuesday Cycles have been steady, but “on the retail side, ASE has faced challenges increasing profits and improving sales since its acquisition of its retail operations.”
Performance has around 100 stores across the country, including stores in Chapel Hill, Cary and Raleigh. Performance’s history goes back more than 30 years, when it started as a bicycle catalog company. It has around 2,000 employees.
Bicycle Retailer and Industry News estimated that Performance’s annual revenue was between $275 million and $280 million, when it was purchased in 2016. Advanced Sports has more than $100 million in debt, according to its bankruptcy filings.
Cunnane told Bicycle Retailer and Industry News, a trade publication, that 40 Performance locations are set to be closed because they aren’t profitable, though that number could change as the company renegotiates leases. The company doesn’t own any of its stores.
A spokeswoman for the company said the exact stores won’t be determined until the bankruptcy process is further along.
“We’ve been trying to renegotiate those leases since we bought (Performance),” Cunnane told the trade publication, adding it was on pace to run out of money in January. “It’s hard to have any kind of leverage because we have about 100 landlords.”
Zachery Eanes: 919-419-6684, @zeanes