Search

How to go Belly Up

Share to Facebook Share to Twitter Share to Digg Stumble It More...

After a short-lived North American life, CoreUpt went into bankruptcy earlier this month. The French ski brand, which started selling direct to consumers in 2009, was distributed in North America since the 2011 season via The Soze Group in Canada.

But with a myriad of problems, CoreUpt reportedly owed its creditors too much money and went belly up before getting products made for the 2012-13 season.

Skiing Business caught up with Jay Taylor, the president of The Soze Group, to find out why a brand that’s gaining momentum was stopped abruptly.

So you guys sent cancellation orders to your retailers?
Yeah. We tried to guarantee our production using our own cash flow, but the guys at CoreUpt wanted a piece of the action in order to manage everything. The factory didn’t agree to the terms we were trying to get, and the deadline for a production run was June 1. It would have ended up costing too much money for the 2012-13 skis to be made.

In the end, we couldn’t get enough other countries on board to keep the brand going for this season.

Jay Taylor, The Soze Group president

Jay Taylor, The Soze Group president

Were you in a position to buy the company to keep it going?
The creditors own the brand name as well as the operational side of the business, but the two are separate entities. We tried to buy just the name, but they didn’t want to sell the two separately.

I think the creditors have about 1.2 million euros (about $1.5 million) invested, and they’re taking offers. It would have made sense to us if we could get it for 10 cents on the dollar, but they wanted 20 cents to 30 cents on the dollar. Beyond the acquisition cost, we would have needed to put another $1.5 million to $2 million back into the company to rejuvenate it.

We talked with the distributors in Sweden and in Norway about pitching in with us to buy it, but we couldn’t work out the details. The longer CoreUpt is in bankruptcy, though, the better our chances of buying it are because I imagine the owners would accept a lower bid. We’ll continue to watch it and wait for the right time-if there is one.

As the North American distributor, how does this impact you financially?
In terms of missed revenue, it’s about a $500,000 hit based on what orders were already placed and what we expected for reorders. Beyond that, we put in about $175,000 for samples, trade show and travel expenses, and other normal business costs.

coreuptskis

Being a distributor, you’re a little removed from the inner workings of the parent company. So from that semi-outsider’s point of view, what do you see as the reason the brand went bankrupt?
I think there were multiple things that led to this. They had a pretty big athlete program to help drive sales, but I think it was too ambitious and cost too much money. They also spent quite a bit of money to increase sales. If done right, you can grow organically about 20 percent every year. But if you want to grow more than that, you need a bridge loan to cover the gap between your profit in one season and what you expect to spend the next. I think that hurt them too much.

Then there was the apparel side of the business. There was a flood in Thailand that wiped out their production, and they expected their direct-to-consumer sales to be bigger than they were. Despite planning to operate on a loss for a few years to develop the brand, they ultimately spent more money than they were collecting.

Did you see this coming?
We had some concerns when they started the apparel program. We were asking questions about how they planned to finance it, and we kept being told to not worry about it. Usually when you’re told to not worry about money, you should start worrying about money.

Guerlain Chicherit, CoreUpt founder

Guerlain Chicherit, CoreUpt founder

How much responsibility do you guys take?
We did everything we needed to do to put product on the wall and take orders. The only thing that we could have maybe done differently was to pay the parent company upfront for the orders we took, but nobody in their right mind would have done that. If we would have done that, and products weren’t delivered, we would have been screwed.

If the price is right and you buy the brand, what makes you think you can do things better?
We know what they did wrong, and I don’t think it will take that long to make CoreUpt profitable again. The brand is strong, the products are good, and we have the distribution channels in place. I don’t think it would cost too much to get the brand back on its feet.

Categories: Features Products Profiles

17 Responses to “How to go Belly Up”

  1. huckcliffs says:

    The irony of Bishop claiming first here is appallingly funny.

    Great article.

  2. mauro says:

    sick first dougy

  3. Dorian Gray says:

    "We know what they did wrong, and I don’t think it will take that long to make CoreUpt profitable again. The brand is strong, the products are good…"

    Apparently, you aren't aware of everything that's wrong with the brand. I've seen Dale tear through skis on the daily. Quality is king in the end, and for long term success, that's something you'll need to step up.

  4. Larz says:

    ^dorian for the average skier CoreUpt was a perfectly good ski. the normal majority of skiers are not going to ski as hard as Dale or as often. it saddens me that such a cool brand has gone bankrupt and i hope that CoreUpt will make a comeback in the next few years.

    • arspinna says:

      So you would recommend just creating an average ski for the average user and calling it good? I would not invest in something that would not support hard or frequent skiing. I cannot believe you commented on a business strategy to just be average, and still successful, some how…
      We look up to pros and their equipment, and if we see them tearing though equipment, it is hard to go out and pay $$$ for crap.

    • Dorian Gray says:

      Hahaha…

      The majority of sponsored riders will go through 2-3 pairs of park skis a year (short of the company sending them extras and protos for testing). Dale is on a new pair of skis every two weeks.

      Straight up, creating a mediocre product just because the average person will probably not break it is the weakest shit out. Nobody who respects their brand would do that – the only people that do that are the people in in for the profit and nothing else. That's not the sort of brand I'm about to support.

  5. Colby says:

    Dorian is right actually, I got lunatics this year and I loved them, but I really ripped them up and I didn't really do much other than obviously park skiing and only used them once for urban, but nothing that should've led to them getting as shredded as they did

  6. Cheese says:

    They gave away a lot free skis and pro-deals. If I was a pro-hoe, I'd have their full quiver and all it would cost me is a case of beer and an HJ. No wonder they didn't have any money.

  7. Peter says:

    Idk what all this "Coreupt was gaining momentum" is all about if you mean they used to not exist then they did temporarily then yes, more than no people skiing on it (because it doesn't exist) is momentum I suppose. But this is a perfect example of what happens when you create a fake company for no good reason in a niche market. Coreupt will never capture the average skier because they're always going to go with the tried and true and whatever the big names ride on. (rossi, salomon head etc..) The rest of the companies have to fight for the attention of a few very knowledgable very opinionated and very interested people who have at least a rudimentary understanding of how the market should work, whats good ant whats not. And when a product is obviously not good because it's essentially a half-assed knockoff then it's going to fail. Obviously no ski company is good enough to draw many of the top tier athletes to their team without even being in the stores yet.

  8. DANNY says:

    ha! sucks! BUY LOCAL!!!

  9. eric rutishauser says:

    great interview, good answers to some tough questions, thanks Jay

  10. James Hudson says:

    Let this be a lesson to every business out there. Invest in the right strategies and the most skilled people you can find. Otherwise, you could be staring bankruptcy in the face a lot sooner than you think.

  11. Hello, I think your site could be having browser compatibility issues.

    When I look at your web site in Safari, it looks fine but when opening in Internet Explorer,
    it has some overlapping issues. I merely wanted
    to give you a quick heads up! Aside from that, excellent site!

Leave a Reply