The parent company of Kona Bicycles has announced the appointment of a new chief financial officer with a history of "improving profitability and operational efficiencies." They've also reiterated a desire to sell Kona in order to "direct its resources toward investment in its key water sports businesses."
Kent Outdoors, the owner of Kona Bicycles
since 2022, announced in
a press release yesterday (April 18th) that Rob Otto has joined the company's executive management team as the chief financial officer (CFO). The news comes after Kona left the
Sea Otter trade show under strange circumstances and staff were reportedly told to expect a town hall meeting yesterday, April 18th. We understand this news is part of what was shared at the town hall.
| We are extremely excited to welcome Rob Otto to the Kent team. He is an experienced leader who will help guide Kent as we actively pursue new opportunities.— Kent Executive Chairman Lee Belitsky |
In its press release Kent Outdoors states Rob Otto has "an exemplary track record in the consumer packaged goods (CPG) space of improving profitability and operational efficiencies along with managing integrations, Otto brings a wealth of experience and expertise to the Kent team and portfolio of brands." In a further state the release shares that Otto has previously been recognised for "his ability to rapidly interpret complex situations" and "business solutions that spur growth and improve operations and profitability."
Kent Outdoors followed up with a
second press release today (April 19th) which announced a $100 million credit from Eclipse Business Capital. The press release devotes a sentence to the fate of Kona Bicycles in its 11th (of 12) paragraph, saying that "in connection with the investment of capital and the management team coming onboard, the Company performed a strategic review of its operating units and determined that it would continue to seek a buyer for its bike business, Kona." It goes on to say that this move would allow them to put more resources towards the company's water sports businesses.
So where does this leave Kona and its employees? It's unclear. We know there is at least one interested party, so we are hopeful that it soon finds a buyer. We understand that remaining Kona employees have not been laid off
yet, but an anonymous with direct knowledge told us that the fate of the employees will ultimately be up to whoever the buyer ends up being.
We wish the Kona staff all the best, and hope to see the brand return to strength soon.
PRESS RELEASE: Kent Outdoors Announces $100 Million Credit Facility From Eclipse Business Capital to Support Growth Strategy
Financing Follows Earlier Investments from Preeminent Investor Group; Kent to Continue to Invest in Leadership, Innovation, and Operations
SALT LAKE CITY, April 19, 2024 /PRNewswire/ -- Kent Outdoors ("Kent" or the "Company"), which has been helping people in their pursuit of outdoor adventures for more than 60 years, today announced a $100 million credit facility from asset-based lender (ABL) Eclipse Business Capital. The new ABL facility follows recent investments from Goldman Sachs and Comvest Partners. These investments are critical to the Company's efforts to implement a strategy for future growth and success as it continues to market innovative new products for outdoor enthusiasts and adventure seekers.
"We appreciate being trusted to deliver this critical financing on an expedited timeline. It was a pleasure partnering with such a select group - the Company, Arete Capital Partners as well as term lenders including Goldman Sachs and Comvest," said Marty Battaglia, chief executive officer of Eclipse Business Capital.
With the financial support of its backers, Kent expects to make significant operational improvements, as well as bring in new leadership.
"We appreciate Eclipse's partnership approach; their organization worked expeditiously throughout and delivered the financing exactly as outlined. The capital investment is instrumental to maintaining solid partnerships with our key vendor partners and customers while allowing Kent the flexibility to also pursue new growth opportunities," said Kent Executive Chairman Lee Belitsky. "The support also allows the Company to continue to build our market share by attracting new marquee customers and maintaining long-term relationships with key suppliers."
Belitsky joined Kent as part of the capital investment, bringing significant experience in the sporting goods industry as a key executive who helped drive Dick's Sporting Goods growth over the past 25 years. Additionally, Kent recently appointed Rob Otto as chief financial officer. Otto joined Kent after successfully completing the sale of RW Designs, where he served as the company's chief financial officer and chief operating officer, a wholesale and direct-to-consumer business. Prior, Otto held CFO and COO executive leadership roles at multiple CPG companies such as Z Gallerie, Hudson Jeans, Seven For All Mankind, and Affliction Holdings.
"We are encouraged by the commitment to Kent's brands from its employees and stakeholders,"
said Kent Sowell, vice president of Goldman Sachs. "Coupled with new additions to the Kent executive leadership team, we are excited to support the Company as it focuses on its next phase of growth."
While Kent's business operations are evolving with a focus on customer service and consumer satisfaction, its key operating divisions continue to move forward with an eye on the future with new product innovation for the 2024 season. Kent is now in a position to move more aggressively forward in servicing its loyal customers and those entering outdoor sports for the first time with incredible products. Kent's dedicated employees have spent countless hours helping the Company get to this point.
The Company has retained key leaders of core divisions such as Dave Cook in the Outdoors Division and C.J. Vlahovich in Watersports, both of whom have been with the Company for more than 25 years. Additionally, Zack Eckert, who also has extensive experience in the outdoor industry, has been promoted to general manager of the BOTE brand. Eckert has been with BOTE for more than five years, most recently as vice president of sales, and previously held various leadership positions with West Marine for more than 11 years.
"Kent is synonymous with outdoor sports and the pursuit of outdoor adventure," said Cook. "Focusing on the Company's profitable core business lines that provide the greatest promise for long-term growth will help right the ship and navigate the Company into calmer waters."
In connection with the investment of capital and the management team coming onboard, the Company performed a strategic review of its operating units and determined that it would continue to seek a buyer for its bike business, Kona. This move allows the Company to direct its resources toward investment in its key water sports businesses. The bike industry has faced very significant challenges in the post covid world and Kona has not been immune to these headwinds.
"Within the Kent Outdoors family of brands, we pride ourselves on a robust legacy characterized by resilience and an unwavering ability to overcome hurdles, consistently emerging stronger in the face of adversity," said Vlahovich. "While the path to improvement has been demanding, our devoted team remains steadfast in our conviction that Kent Outdoors is destined to continue as the foremost innovator in cultivating vibrant brands that elevate outdoor enjoyment for all."
About Kent Outdoors
Founded in 1959 in New London, Ohio, Kent Outdoors is a diverse platform of outdoor brands with a broad product set spanning personal flotation devices, wakeboards, water skis, towable tubes, snowboards and more. The Company's portfolio of more than 15 iconic brands comprises industry- leading names such as BOTE, HO/Hyperlite, Connelly, O'Brien, Liquid Force, Onyx, Aquaglide, Barefoot/Fatsac and Arbor Snowboards (managed by agreement with the Arbor Collective), which have all contributed to the Company's long-term success in serving a broad base of action sports participants of all ages and skill levels.
About Areté Capital Partners
Areté is an operational improvement and investment firm which provides independent fiduciary and stewardship services to companies experiencing complex organizational change. Areté is proud to serve on Kent's Board of Directors and currently maintains C-Suite and Strategic Finance roles, having supported the Company throughout this period of growth and leading the Company's refinancing efforts.
…and Honzo ESD please. And the Wo. Ok 3.
$> $(".product-card").length
36
And there are _two_ full pages. Why do they have 72 models?! They're not quite as bad as Trek, but they're close, and they're a much smaller brand.
1) The cheap beginner aluminium
2) The hardcore steel hardtails
3) The carbon XC racer
This thing where they sell one frame with 15 different specs is no good for anyone. It confuses newbies, takes up too much space for resellers and bike shops, leave consumers disappointed that the exact spec they set their heart on isn't at the shop they wanted to buy it from and only really benefits OEM parts manufacturers.
OK... pretty bitter.
Imagine your life's work being *extracting value*. Not "I helped make a bunch of sick bikes and people had a great time riding them", just, "I extracted value, my employers were pleased". Depressing shit.
Every Kona bike I’ve ever looked at in the store was the worst value for the money.
I just don't want to see the Kona name slapped on a Huffy sitting on a rack next to the Lego aisle in my local Walmart.
Just in case they are... I'll take these, please:
Honzo
Explosif 853
Process 111
Unit
Abra Cadabra
Jake The Snake
Stinky
In all seriousness though, I hope they find a buyer who understands what Kona is really about. Back in the day, when you bought a Kona you were buying into a way of thinking. It was a tribe. I'd love to see that back again.
In Number of years past, you are correct.
On January 01, 2000 at 12:00:01 the 21st Century began, and events from before that were, in this context, from the previous century.
Just sayin'.
SCALE, SCALE SCALE!
Then the bubble pops, the market returns to normal levels (we're actually slightly above pre-COVID levels right now for new bikes purchases) and these poor brands that just got leveraged to the nines are left with a lot of overhead, and not enough demand to fit the 1000% scale they just made a few years ago, mostly built on (at the time) low-interest debt. Cash dries up fast when you're in that scenario.
Then the multicorp firms dump you, liquidate assets, and then we lose legacy bands like Kona, or innovators like Pole and Guerilla Gravity. Pro riders get dropped, industry folks lose their jobs, and the bike world as a whole is undeniably worse off because of it.
The short term pump-and-dump for 2-3 years of mega profits just to say "oh too bad, no more demand lol, have fun with liquidation!" makes me genuinely angry as hell, but it's happening across not just the bike industry. These people are f*cking tearing apart good businesses and building a financial elite world you're not invited to join.
Yes, even you Yeti riders
Good brands make cool bikes, employ dope people, and genuinely make this amazing sport all the better for everyone. What we can do is support them, buy their products, and reject this weird-ass corporatism that's trying to do its best job at killing the stoke on our sport this year.
I certainly don’t blame the business owners who want to cash out after pouring their energy into establishing a rad brand through devotion and love for the product. However, once an original owner sells I will absolutely not patronize a private equity owned brand if I have the option. In my mind, there is not a single product or brand that has ever been improved by the sale to a private equity/investor group. Without exception, such developments always end up with a shittier product.
CEOs should lose their life savings when they do stuff like this. They always want a government handout to bail them out of their poor decisions too. We need to stop socializing corporations when they go broke.
I really want to check out Revel, I lived in the RFV and have a connection to that area so the brand really appeals to me. But the GG thing left a super sour taste in my mouth.
Edit: Thoughtful eye?
“I’m posting anonymously due to potential repercussions, but as someone who works at Kona under Kent Outdoors, I feel compelled to share the distressing realities we face and urge you to take action.
Kent Outdoors is currently run by short-sighted individuals who are utterly disconnected from the communities, sports, and people attached to their brands. Their lack of understanding and interest in cycling and any other sport has not only led to poor decision making but also to a toxic corporate environment where Kona and their other brands are suffering greatly. Under their management, Kona has accumulated millions of dollars in unpaid debts to our suppliers (Fairly and Hodaka), with no attempts made to negotiate or even communicate, effectively planning to stiff them. This strategy isn’t limited to Kona; it’s a disturbing pattern that is evident across all brands under the Kent Outdoors umbrella. I urge all suppliers and partners across the board that do business with Kent Outdoors to be careful. Everyone should be seriously concerned about this pattern of non-payment and poor business ethics.
The working conditions here are more than just poor—they’re abysmal. Communication is practically non-existent now under the new management, creating a chaotic environment where decisions are made without transparency or employee input. The stress of potentially not getting paid has been a reality for some of us, adding to an overwhelming sense of job insecurity. Long hours, and weekend work, is the norm all without additional compensation or even basic recognition of our hard work.
The only individuals who seem to survive and even advance under the current regime are the “yes men” those who align too readily with a flawed agenda, lacking critical engagement or genuine passion for the brands. This has caused significant unrest among other brands under the Kent Outdoors umbrella, who are equally upset about these new leaders. Their inability to effectively manage people, combined with a lack of fundamental understanding of the communities they serve, is rapidly destroying the companies. These leaders are not just failing; they are actively dismantling the very essence of what made all of these brands successful.
The company is not just being led poorly; it’s being led by individuals who don’t seem to care about the damage they’re doing to the brands, communities, or people. Any company considering a partnership with Kent Outdoors should seriously reconsider. Any customer should consider carefully buying products from our companies since who knows if we will even have the parts to support them.
In light of these issues, I am calling on all community members to join us in boycotting all Kent Outdoors brands. We need to demonstrate that these destructive practices are unacceptable. By uniting and applying public pressure, we hope to initiate a significant change in Kent Outdoors’ direction and leadership to a model that values the employees, respects the community, and truly understands the sports industries they are part of.
Thank you for taking the time to read this and for any support you can lend. Let’s stand together to save Kona and the other brands we cherish.”
Other Kent Outdoors brands besides Kona: Arbor Snowboards, O'Brien, Freedom Foil, Aquaglide and BOTE.
Could you imagine selling a business that's existed since the 80s, that in my opinion has a great niche potential as a product position, it's got that personal feeling of a local bike shop bike yet is a relatively big but not huge brand. The problem I can imagine with Kona is high price for what you receive, but on the flip-side aluminium frames come with a lifetime warranty, and people that buy Kona are on the higher end, loyal repeat customers. Kent outdoors literally have a golden egg of an account they've purchased, albeit probably at the bust of the Bike Boom industry. The industry will pull out of the hole - yet Kent Outdoors and it's investors still could screw it up. by being extremely short-sighted and wanting direct gains.
Now I have only one question - why do these companies are being sold in a first place? How do they end up with such shitty owner?
Basically what I am saying, if you are into small bike brand, and it get's sold, f*ck that brand... they chose that way, and I am no longer interested. So technically I give 0 shits about Kona moment it was sold lol
My customer service with Canyon for instance is very different - Buying an in-stock bike only to keep lying to me, telling the bike was in transit when it wasn’t, because they oversold their product.
So from that aspect, if you are a Kona worker, thank you for the best bike I’ve ever purchased and ridden. Hope things work out for them.
in 2013 they brought in shady wallstreet types for the rollout, and then visionary CEO's whom retired with incredible options and in their place went failed tech CEO's whom kept bringing in their own teams. While the company soared and new people were hired at market rates, the existing employees were gaslit and abused. Only the yes men and the liars did well, a few select people made strategic moves that leveraged their worth when they were irreplaceable but the rest of us just had to take it.
Ive been gone 3 years and the stock price is back to where It was when I started, I am so grateful for the experience I gained and the friends I made but damn its good to be free.
From my perspective this all needed to happen. Companies needed to sell to bloated corporations during the supply chain crunch for the corporations to fail. Hopefully the original owners have a takeover clause or at least a way out of a non-compete.
Either way the employees were gonna get screwed, hopefully the original owners have something lined up for them.
Here’s what I don’t get — they paid for a spot for a tent, shipped products and materials, paid for travel and lodging for multiple staff members, set it all up and then pulled the plug. How does this even happen? It’s not like an event this big can happen without extensive planning and forethought and approvals from management. And at that point, why bother pulling the plug at all? Why? All the money had been spent — at that point, just let it ride. They even released a new gravel bike the same day. Do they realize how inept it makes them look? And then their plan is to sell their shit show?
Like somebody had a hissy-fit...
I’ve heard ‘credible’ rumors that Kona (under the old owners insistence and against some employee’s objections) doubled down on purchasing extreme inventory quantities during the height of the pandemic. By the time that product arrived Kent owned the company and bike sales had substantially declined and they got caught with their pants down.
Arbor snowboards, which Kent also owns and which is closer to their core competency in water ski/wakeboard is seemingly doing quite well. They’ve hired life-long well respected industry veterans
To management roles, build a solid team of core snowboarders from heritage and current generations (Bryan Iguchi, Pat Moore, Mike Liddle, Erik Leon, etc), and have to most relevant product line in the history of the brand.
Big picture, it was just terrible luck all around for Kona and I hope some version pulls through with good management.
Rob Otto has "an exemplary track record in the consumer packaged goods (CPG) space of improving profitability and operational efficiencies along with managing integrations, Otto brings a wealth of experience and expertise to the Kent team and portfolio of brands." In a further state the release shares that Otto has previously been recognised for "his ability to rapidly interpret complex situations" and "business solutions that spur growth and improve operations and profitability."
You're basically on life support from the moment of sale, and it's completely up to them when they pull the plug.
F*ck those 'groups', they don't give a shit about bikes.
PON doesn't care one bit for bikes, they are (yes, still are) a car company at hart. They only took an interest in bikes when they realized they could profit from it. They see it as a part of the 'urban mobility solution'. Yuk.
Accell was indeed always a bike brand, but as soon as a company starts buying ' a bunch of brands' you know they have become greedy and just want to milk those brands.
Accell is about bikes. They were, and they probably will be in the future.
PON is horrible. They will drop bicycles the minute something else pops up that is the new 'future of urban mobility'.
Neither of them is acting like the holdings you describe, that is true.
Problem with both companies however is that the bicycle market is changing rapidly and radically. Ebikes is where it's at, normal bikes are already an afterthought. Subscription models are popping up, leasing ebikes will be the new normal, because those big, complicated, heavy bikes are getting too expensive to buy, and need very regular professional maintenance. Swapfiets, Lease-a-bike etc. are examples, and many more are already here, and many more will follow.
And that leaves us, people who are in to road bikes, gravel bikes, mountain bikes, touring bikes etc. in a bad spot. A brand like Cannondale (PON owned) will need to focus more on the bikes that fit in to that new model, or else PON will probably lose interest in them. It basically comes down to how long companies like PON are willing to sponsor our hobby. Because it most definitely isn't there core business.
I do understand that if one starts a bike company, and it organically grows, and grows, that at some point you end up with a type and size of company that is totally different than what you ever had in mind. If at that point you decide that that is not what you want for yourself, that it has just become too much of a burden, too corporate, too stressful, too busy, or you don't feel competent to lead such a company any longer, then it is maybe better to sell the company.
It would be nice however if, at that point, they wouldn't go with the highest bidding awful company, but to a company that is more in line with their values. But I'm pretty sure those are not standing in line to buy companies.
Otherwise a Process X in that pink/salmon colourway should have been in my possession…
Nevertheless, love my Unit.
Man I'm often caught off guard by how little pinkbikers know about cycling outside of mtb. Maybe it's just mountainbikers in general.
I'm literally a Kona fan (riding a Process) who did some bikepacking during Covid.
It's so hard to convey info online. I thought I did well mentioning its WHAT NEW OWNERS ARE GONNA TAKE FROM THIS ACQUISITION. But... Alas. People will always read the most negative context possible from a message instead.
The neo-liberal economic style that has been prevalent in the last 30 years has been bad for regular people and great for the ultra wealthy. No one is suggesting full-on socialism, but we should definitely be slapping the shit out of these corporate leaders for how they manage their companies, and should be trying to reduce the perverse incentives that drive short term stock price growth and quarterly-profit seeking behavior.
The ultra wealthy should pay their fair share and that is what a proper tax system should be for.
Unfortunately Socialism is pure evil. It promotes mediocrity and removes incentives…
Socialism has only been truly attempted in countries that have already have major cultural/societal problems with corruption. Corruption, as we know, can cause any system of government or economic system to fail.
These countries, given these endemic issues with corruption, were ripe for the kind of total revolution needed for the implementation of a new economic system, hence why we have seen socialism pop up in countries that are already unstable due to corruption.
The real test of socialism would be to see how it functions when implemented by a relatively stable, non-corruption prone society. That said, no one really wants to be a test-bed for a radical systemic change. And as long as a large portion of the population isn't starving in the street, large scale revolutions like that are unlikely.
I never suggested that the test for whether an economic system is working is that its implementation needs to be in a country with ZERO corruption. I said that the test should be in a country that isn't already overwhelmed with systemic corruption, as places like Russia are.
You seem to be either ignoring or misunderstanding the points I'm trying to make here, so I'll just end this discussion.
Hey dumbass, don't buy a bike company at the peak of a boom and expect instant profit. Serves you right for thinking you could take advantage of something you don't understand. I feel bad for all the good people that will be with out jobs because of your stupidity. Cheers!
There's the brands you should avoid. Idk why this Rober Baron needed to shut the tent down but looks like they absolutely will kill the brand off.
"Consumers" lo f*cking l.
Kona is not profitable for Kent
Kent’s water sports business is profitable, but needs assets to grow.
Eclipse (with lots of big finance backing) has loaned kent $100mm to grow.
Part off that loan involves taking on a new executive (Belitsky)
They also announced a new cfo: Rob Otto
My takeaway. Kent wants to grow its most profitable business line but needs assets to do it, eclipse lends them money and a manager for their money (Belitsky). Kent also wants to sell their least profitable business (Kona bikes) after making a terrible decision to buy Kona bikes in 2022.
Missing from all these announcements is the true owner of Kona bikes: seawall capital (everything is owned by private equity) so seawall bought Kona in 2022 because they thought the high would go on forever, it didn’t, so they tried to pivot Kona to a dtc bike company, but effed that up by pissing off their dealers and trying to make up for it by selling bikes during the worst time ever to sell bikes. Cut to 2024, seawall is trying to cut their losses, they hire Rob Otto to make Kona look as profitable as possible (he is a cfo, not an operations officer). Rob is going to hide as much debt/losses as he can, cut costs dramatically and try and present Kona bikes as a sellable asset. They will sell Kona, and its future depends a lot on what financial decisions Rob Otto makes over the next 6-12 months. Kona as a name is a good brand, but their revs/ebitda are probably crap the past few years. Honestly Kona bikes probably isn’t worth more than a few million (realistically, depending on tooling/inventory/debt, I’d guess around $5-10mm) dollars these days, they’ll find a buyer.
bikes peaked around the 10 speed era an the current state of the industy shows it.....
1. Super good value consumer direct brand that makes a decent bike
2. Super cool brand that makes a decent bike, but is extremely cool (looks cool, tells a good story about the brand)
3. Bikes with above average/amazing ride quality
You kind of have to do all three, but you need to NAIL at least one of the options above to survive. The trouble is Kona is currently sort of expensive for what it is, average (status quo good ride quality), and they don't really tell a good/interesting story. It would be great if they could find their stride and stick around. The brand has so much cool history.
**openly tries to get shot of Kona, their one bike brand acquired all those eons ago back in er… ‘22
Also, there’s not enough mention of really important details like “synergy” and “vertically aligned horizontal integration” (or something) to make me think these guys at Kent have what it takes to cut it in the real world…
I'd be surprised if Kona turn over much more than $25m, no one rides their bikes not made anything decent in years.
.
WTF? Watersports now?