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#SaveMEC is about more than saving a co-op. It’s about preventing another Canadian icon from suffering the same fate as Tim Horton’s: a slow grinding decline under ownership that doesn’t care. So, let’s look at the unimpressive and troubling potential new management of MEC.
Short version: @MEC to be run by three middle-aged white men: a mediocre-at-best American investor, an out-of-work grocery CEO and a COO who might never have managed a store and runs a guns-and-testosterone shoe brand. This should go well!
Long version: First, the buyer, Kingswood, a PE fund out of LA. Its website claims it was founded in 2013, but it only sort of was. Until 2019 Kingswood seems to have been just one guy: Alex Wolf. His first real fund was raised last year, and MEC will be that fund's first deal.
Alex has a questionable track record. He spent 12 years at Cerberus, which is the type of private equity company that plays the bad guy in movies. Recent hits include a failed gun-market consolidation of and almost bankrupting a hospital during COVID. https://www.axios.com/easton-hospital-pennsylvania-4c540358-5cdf-45d3-913f-2b04741a8aa5.html
Alex’s own record at Cerberus seems…yikes. We know from this Kingswood filing that he served on the boards of Alberston’s, Anchor Glass, EXCO, FILA, SpA, Keane, NewPage and Advantage. He doesn’t list these anywhere publicly, and it’s no surprise why. https://basic.10jqka.com.cn/ajax/usaph/pubDetail/f9d1886f31b675c1_html
Albertson’s, loaded with debt, failed once to go public and finally listed this year to a bad reception. https://www.bostonglobe.com/business/2020/06/26/albertsons-falters-debut-million-ipo-disappoints/nvNDG4hF1w9nhGyzitZMaL/story.html
Anchor Glass went bankrupt and Cerberus ruined a related company Anchor Hocking so badly it pretty much bankrupted a whole town. https://www.theatlantic.com/business/archive/2017/03/lancaster-ohio-glass-house/519351/
FILA suffered under Alex and Cerberus until being revived only after they sold it to management. https://www.hindustantimes.com/business-news/the-man-who-brought-fila-back-from-dead-is-worth-830-million/story-FnANTOFTGL4DG88HaaJsGN.html
NewPage: bankrupted. How we doing so far? https://dealbook.nytimes.com/2011/09/07/cerberuss-newpage-files-for-bankruptcy/
EXCO, Keane and Torex also have real questions, but this is already too long and there's lots more to go. Just so as not to seem like I’m cherry picking, Cerberus did double their money on Advantage! https://www.wsj.com/articles/DJFLBO0020120104e814s8cfx
He did all this, and then he left. It is very strange for someone to leave a Managing Director role at a big PE firm and then NOT raise a proper fund. But that’s what he did. Why? Who knows? He's about to own a Canadian icon, and he won't grant ANY media interviews.
His non-role in MEC PR is very weird. PE companies are usually VERY eager to talk about all the value they’ve created and the great companies they run. But Alex won’t talk, claiming “SEC restrictions.” I’m sorry…what? I'm almost certain that's not real. https://thelogic.co/news/kingswood-capital-management-won-the-bidding-for-mec-can-it-win-over-sceptical-mec-loyalists/
But what about reported “retail veteran” Eric Claus, pegged to be CEO of MEC if the Kingswood deal goes through? Well, he’s mostly been in grocery. MEC…is not a grocer. Note to Canadian media: there are lots of different types of retail!
His last job ended in 2017 when he was fired from Save-a-lot, an American discount grocer, 6 months after it was sold to Onex. So, his knowledge of e-commerce, one of MEC’s most important challenges, is likely very limited. https://www.supermarketnews.com/executive-changes/save-lot-taps-lidl-vet-mcgrath-new-ceo
Before that he ran no-service retailer Red Apple Stores (formerly TheBargainShop!) for a few years. According to LinkedIn he didn’t work from 2009-2012 after “resigning abruptly” as CEO of the grocer A&P. https://www.nj.com/business/2009/10/ap_chief_executive_eric_claus.html
Grocery + low-end retail is…not @MEC. Not an obvious fit. Nor does he get what MEC is all about. And I quote: "I'm sure there'll be some people that won't be happy they lost their $5, but I think the co-op's given them over the years a lot more value than $5." Riiiight.
(Also – another oddball secret. Eric was apparently on a podcast called “Into the K-Hole” hosted by his son Kevin, self-described as “incredibly offensive, seldom funny.” Eric’s episode - #003 – has been mysteriously scrubbed from the internet.) https://open.spotify.com/show/4Ph0v0MNdnz4J12SdvdBQm
Which brings us to MEC’s potential new President and COO, and man-of-the-hour, Jay Taylor. If you’re wondering what word was scrubbed from the FB post in this story, it’s “douchecanoe”. https://www.cbc.ca/news/business/mec-executive-hire-company-military-1.5740922
Is Jay Taylor a douchecanoe? No idea! Haven’t met him. Although I am beyond thrilled to have that word in my vocabulary now. However, he may not be an ideal fit for MEC. First, there’s his Instagram post from 2016.
Then there’s the marketing choices at Lalo Tactical, where he is currently CEO. Their feed has this, and another pic with the caption: “I have a very strict gun control policy; if there's a gun around, I want to be in control of it.” I get it! Hahaha! Ha.
https://www.instagram.com/p/CD7ToQrAWmK/?utm_source=ig_web_copy_link
https://www.instagram.com/p/CD7ToQrAWmK/?utm_source=ig_web_copy_link
All good though, says Eric Claus. Because one of the target markets for Lalo Tactical is “soccer moms.” First: does anything say grocery executive from 2005 more than “soccer moms?” Second: nonsense. https://thelogic.co/news/new-court-documents-a-new-executive-appointment-seven-things-weve-learned-in-the-last-24-hours-about-the-dueling-mec-bids/
Most importantly, though, is that according to his LinkedIn profile, Jay Taylor has *never run a store*. A Chief OPERATING Officer with no store management experience. None. Lalo is an on-line brand with no locations, and before he was a brand sales guy.
There’s no question what’s going to happen here. MEC’s real estate will be sold off and they'll apply for the LEEFF gov't loan to pay back Kingswood. Much fewer than the promised 17 stores will remain open. In 3-5 years it will be sold to a competitor. MEC, as it was, will die.
Look, I don’t know whether Alex, Eric and Jay are good people or not-so-good. I don’t care. I just know they’re an obviously terrible fit for MEC, and the fact that the @MEC Board says otherwise is nuts. This deal is only about making sure @RBC, @CIBC and @TD got their money.
Why should we care? Well, the core of MEC is simply beautiful. People who care about the environment, wanting to get outdoors, getting together to get the best stuff for the best price. That’s what it was. It can be again. #SaveMEC https://thewalrus.ca/how-mec-lost-touch-with-its-roots/
