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Updated: Kona Bicycles to be Sold as Brand’s Future is the Talk of Sea Otter

Kona bikes missing from Sea Otter
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Update 4/20:

Kona’s (current) parent company Kent Outdoors put out another press release shortly after this story was published. Hidden inside a lot of words about a “$100 million credit facility from asset-based lender (ABL) Eclipse Business Capital”, Kent Outdoors announced that they would be selling the Kona brand.

“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.”

It’s unclear whether all current employees have been laid off, and if the sale will be for anything more than just the Kona name. Check out the most recent press release in full below.

Original post:

Sea Otter is in full swing and there are a lot of brands in attendance. But it’s the brand that isn’t in attendance that’s generating the most buzz. After appearing on site and setting up their tent, Kona Bicycles then tore down that same tent before the show even started. By the time we rolled into the venue on Wednesday at the end of our ride with Otso Bicycles, the space for Kona’s tent was already vacant (circled above).

The move is a head-scratcher for a number of reasons – the brand had just unveiled a new adventure bike as the show opened, and it seems like a strange move considering they had already paid to get their booth to the venue and set it up. However, the day after their mysterious exit, it was announced that Kona’s parent company, Kent Outdoors, had just appointed a new CFO. According to the press release, new CFO Rob Otto has experience “improving profitability and operational efficiencies along with managing integrations”. Conspicuously absent from the press release is any mention of Kona Bicycles.

We’ve poked around Sea Otter to find more details, but for now, no one is willing to make any sort of comment on the record. BRAIN reported earlier in the week that the company expected to have a “town hall” meeting on Thursday, which seems likely to have taken place, but without any further news. We’ll keep digging, but for now, the future of Kona remains up for interpretation.

PR From Kent Outdoors:

Executive Hire is Part of Company’s Strategic Investment in Leadership, Innovation and Operations

SALT LAKE CITY, April 18, 2024 /PRNewswire/ — Kent Outdoors (“Kent” or the “Company”), which has been helping people in their pursuit of outdoor adventures for more than 60 years, is pleased to announce that it has added Rob Ottoto the company’s executive management team as the company’s chief financial officer. With 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.

“We are extremely excited to welcome Rob Otto to the Kent team,” said Kent Executive Chairman Lee Belitsky. “He is an experienced leader who will help guide Kent as we actively pursue new opportunities.”

As a results-oriented finance leader, Otto has been recognized for his ability to rapidly interpret complex situations, formulate solutions, and make sound decisions. He possesses considerable experience implementing processes and business solutions that spur growth and improve operations and profitability.

Otto joins 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.

“Kent possesses some of the most recognized names and brands in the industry and it is my goal to ensure the company remains an industry leader while enhancing operational capacity and processes to ensure our facilities and people are operating at their peak,” said Otto.

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 HO/Hyperlite, Connelly, O’Brien, Liquid Force, Onyx, Aquaglide, Barefoot/Fatsac, BOTE, 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.

Kent Outdoor PR

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.

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bicycle pubes
1 month ago

maybe kona, as an entire company, got a tummy ache and had to go lay down for a bit. i bet they’re back tomorrow, just you wait. everything’s fine.

Preaching Pedals
Preaching Pedals
1 month ago
Reply to  bicycle pubes

Happened to me while working Sea Otter one year. I threw up in the pond next to some baby birds and then took a nap on some cardboard boxes, but I was back in action before you know it.

Rim Brake enjoyer
Rim Brake enjoyer
1 month ago

“ improving profitability and operational efficiencies along with managing integrations” As someone who has been at several profitable companies that have been acquired by PE firms and subsequently destroyed this is code for “this guy is a pump and dump artist”. RIP Kona.

Anon
1 month ago

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.

Chopper Willie
Chopper Willie
1 month ago
Reply to  Anon

Private equity ruins nearly everything it touches. It’s vulture capitalism at its worst. I’ll never forget what they did to Toys R Us. As a Kona dealer I am not hopeful and I am happy that at the moment I have minimal Kona stock on hand.

Harvey
Harvey
1 month ago
Reply to  Chopper Willie

Another Kona dealer here, everything above is consistent with what we’ve been hearing. People who bought it have no idea what they’re doing, no passion for bikes, and don’t seem bothered that they’re killing an iconic cycling brand because they took over at probably the worst time in the industry to grow a company.

I would hope they would sell to someone who has passion, knowledge, and resources to bring some new vision to this brand. But knowing how uninspired the VC playbook is, they’ll probably go direct to consumer, wring out whatever cash they can from their current inventory, fire the staff, vacate the buildings, and sell the name for whatever they can.

FrankTheTank
FrankTheTank
1 month ago
Reply to  Chopper Willie

It’s insulting to vultures to compare them to private equity. Vultures serve a purpose, they clean up carcasses and reduce the spread of disease. Venture capitol is more like gangrene. They rot and destroy all for the purpose of short term growth.

Jay Ess
Jay Ess
1 month ago
Reply to  Anon

Somebody sold to those Vultures, why does nobody ever get mad at those people?

JNH
JNH
1 month ago
Reply to  Jay Ess

When you’ve worked at something for 3 decades, are well into your 50s (or 60s) and facing down retirement and/or failing health, someone offering you an instant retirement fund is hard to ignore. Having watched my grandfather work himself (and my grandmother) into his grave I find it hard to judge anyone for taking it.

Emerald Metaphor
Emerald Metaphor
1 month ago
Reply to  Anon

I am a long time friend of an already poorly laid off employee. Thank you for telling the truth. Although I never worked fo Kona, except a few small projects from time to time, I knew too much about how things went down for you, this has even caused me to end my friendship, for the overall hurt and stress this lead too in his life and mine. This is not a good way for this industry to go, you are so right, it does not care about me or anyone else who isn’t a fat cat or racer. Bikes could be a big pat of how we live differently, but it is all about money and greed now. Kona’s ol skool owners screwed their long tem employees by cashing out this way, people need to know this too, they are not blameless either, they let this happen and they knew what was coming. All the so-called leaders of this industry set this stage, so balming PE alone is tone deaf. The bike industy has taken a bad anti grass roots road for a long time now, it has killed small bike stores too, it is really sad and wrong, but thanks, again, for speaking out.

Greg Matyas
25 days ago

No need to blame the owners for wanting to retire after a 36yr run. Kona was family to me, and every last one of that incredible team Dan and Jake assembled will be missed.

Half the beast 333
Half the beast 333
1 month ago
Reply to  Anon

As a past employee of Kona for 5 months short of 30 years, I, and every past Kona employee I have spoken with in the past 48 hours applaud you for this post. If I find out who you are, and I will, I owe you a very strong and tasty adult beverage of your choice. So many good, dedicated, hard working, talented and passionate people have worked at Kona over the years and to see it end like this is a shame. Thank you for speaking out. PFW.

Half the beast 333
Half the beast 333
1 month ago
Reply to  Anon

And equally important as the company employees…. The amazing dealers and riders/consumers who believed, enjoyed, contributed and helped keep that brand alive for so many years. Hats off and thanks to all of you.

King County
King County
1 month ago
Reply to  Anon

I think anyone could have guessed everything you stated about the mangement and working at Kona. I do not see the current owners doing anything in response to you airing dirty laundry and calling for a boycott. The only hope for a turn-around is a competent new owner that will hang in there until things level off in the industry.

Cinole Shu
Cinole Shu
1 month ago
Reply to  Anon

New CFO Rob-Otto… Roboto? Oh god the AI takeover is going to start with a washed up bike company.

danimal
1 month ago
Reply to  Anon

i urge you to boycott all brands held by equity companies, as well as behemoths like Trek and Specialized who put profits before anything else.

Oaks
Oaks
29 days ago
Reply to  Anon

I would get what you wrote out to every major youtube personality such as Seths Bike Hacks\Berm Peak, VC Adventures, Bikepacking.com, various Gravel channels and the like since these large channels move and influence the entire industry trends and purchase power. As a loyal Kona buyer for years and at one point a mobile bike shop\kona dealer and bikepacking\mtb\gravel youtube channel myself I really feel you could have an impact. The bike industry is not the only place this is happening. Major hospitals, food companies, real estate,ski and snowboard, are purchased by large hedge funds or corporations, then they dont pay the vendors that supply these companies, stop paying employees, etc and then the stock numbers look good to shareholders and investors(profits look great on paper when a company doesnt have the deduction of vendor and labor bills) while silently destroying the companies in the background. Use the power of social media, if it can influence political elections it can influence the bike industry.

Matty Hairy
29 days ago
Reply to  Anon

Thanks anon for your insightful, measured, and rational response. I’ve been following this situation closely here as well as on NSMB, Pinkbike, and Reddit, and what you’re sharing seems to be the most informed and closest to what I too have witnessed in the last year. I have been adjacent to the goings on at Kona as an active member of the riding community in the PNW.

It’s been heart wrenching to bear witness to the seemingly endless series of forehead-slap-worthy self-inflicted wounds that Kona has suffered under Kent Outdoor in the last year. From a haphazard shutdown of its outdated albeit effective B2B platform last spring, to the en masse termination of almost two dozen legacy employees including its US sales team, to a seemingly random hiring of a team of independent sales reps last summer, to the utterly incompetent and painfully protracted launch of a replacement B2B platform, to the three simultaneous and chaotic sales promos late last year, to the complete and total lack of a dealer prebooking program, to the near-total absence of any inter-departmental communication much less any form of messaging about strategy, production plans, and future product from the Kent overlords…. It’s really hard NOT to go full Occam’s Razor and conclude that Kent is/was _intentionally_ nuking this storied brand. What I cannot figure out is WHY.

I am fairly conflicted about how much to share what I know about the status of product and thus the future for this beloved company… so much of what the keyboard warriors have tapped out in anger and frustration about the alloy Process X and the Ouroboros lacks essential knowledge of actual facts. Facts that have not been entirely unique to Kona, but also internal business decisions that have been absolutely misguided and painfully ignorant. For one, look at the rest of the Kent portfolio: wakeboards, ballast bags for powerboats, stand up paddle boards, etc – consider these VERY simple products in comparison to the complexity of bicycle manufacture. Think about coordinating literally dozens of OEM vendors like FOX and SRAM and Shimano and Maxxis etc, think about development and lead times even in the BEST of times. Kent really had no idea what it was getting into. And I earnestly don’t think it was interested in learning or changing its approach, either.

It brings me to joy whatsoever, but I am certain that Kona’s Long Sweet Ride is over. While it’s genuinely heart warming to read the words of those that hold out hope for a white knight to come in a rescue the brand, I think those of us with industry knowledge, who know the state of inventory in Taiwan and BC and Ferndale WA, know the debt to brand equity ratio is abysmal.

In sum, I hope that before this is all over, someone can respectfully acknowledge the dedication of dealers, customers, and OG employees that brought so many smiles to so many people world wide.

I also hope someone can acquire/secure the countless gems from the warehouse in Ferndale that adorn the walls – the Ti Honzo, the Ti Humu, the full XTR King Kikapu, the Joe Murray linkage fork, the Big Mama bmx bike, the one-off carbon Process 134 proto, the Stab Dee Lux with the Monster T, etc etc.

Kona is dead. Long live Kona.

Michael McGettigan
1 month ago

UM, whatever happened to the bike biz where 11 staffers would have leaked something by now? I suppose there’s a bunch of $everance at stake.

Emerald Metaphor
Emerald Metaphor
1 month ago

Yes, exactly, I know personally that everyone laid off after Kent took over had to sign NDE’s or lose their severance, so you are totally right here, this was poorly handled and is now going to be manipulated by lawyers and media people, the truth is all we will never learn here, so easy to predict this outcome, and I was only peripherally informed here, but this is wrong and this acquisition was poorly conceived and executed by people who can’t seem to understand the Covid boom was funded by the free money, now there are way too many bikes, try selling a used bike now, ugh, so they are hurting the most vulnerable and committed riders here most of all. I am heart broken and largely this has ruined my memories of BC MTB cycling, and I was there on the Shore with a hardtail, before any dualies appeared, so I was a big part of this, and now here we are here, with communally disineterested greed destroying an industry, not the only one. This idea of constant growth and profit is literally destroying the future now.

Matty Hairy
28 days ago

I too am a little surprised that there has not been more insider beta on what is going down, (exception: a comment from ‘anon’ the day after your post) BUT I can say with near-total certainty that there is no severance on offer. A number of folks in Bellingham were moved to an hourly pay scale after being hired for salaried jobs. Don’t know if that definitively rules out severance pay, but I strongly doubt anyone will be compensated for their years of service. From a logistical standpoint, Kent probably isn’t even obligated to pay severance if this business unit is being sold.

Also, for scale, there are probably 11 TOTAL people left working for Kona USA in Bellingham.

David Suto
David Suto
1 month ago

The latest PR from Kent says they are actively trying to sell Kona.

John
John
1 month ago

I’m guessing that a handful of people at Seawall Capital got rich driving Kona into the ground. The private equity scam should be on everyone’s radar. Oh well …

Andreas
Andreas
1 month ago

Firstly, we still have to see if this new message means “we have a buyer and this will be announced on Monday” or if it means “we would really really like to sell, please look at us”. Simply being available does not necessarily mean it will happen, at least not tomorrow.

Secondly, some of the words in the press release could be equally valid for a sizable portion of equally loved companies in the bike business, small, not so small, and large. That is the harsh reality.

Thirdly, if a White Knight investor does step in, this change may well be positive for the brand Kona, and by extension, the people that love the brand.

Chris Miller
Chris Miller
29 days ago

I really hope Kona finds an investor that understands the importance of the Kona brand, and, more importantly, the dedication of employees who work for brands like Kona. It sounds like Kent has already done irreparable damage to tmKona and its employees, but let’s hope they can find an angel investor. A brand like Kona has no chance of succeeding being owned by a brand that brings on a CFO who worked with ZGallery and Affliction. All you have to do is read one sentence of Kent’s corporate speak, word jumble BS, and you have to feel sorry for every brand owned by Kent.

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