For some this is news but many of you reading this have heard these rumors since the beginning of the summer. Either way it's pretty crazy. They were a great place to scoop gear, not the best but they did the job. So what happened and where did things go wrong?
Well, for right now we can only speculate. What we do know is they are bankrupt and have pissed off some pretty big names in our industry. Burton, Dakine and even Fed Ex are the list! Fed Ex? Wait a second, we pay shipping fees don't we? So why can't they even pay their own office Fed Ex bill.
In addition to being a snowboarder and writer I have worked in the financial industry for 6 years and counting. From my experience in both fields a picture is starting to develop here.
According to Transworld Business, sources from within the walls of Sierra's suppliers told them that they got notice the bankruptcy is going to change. Apparently, they want to change the filing from Chapter 11 to Chapter 7. What does that mean in Shred Head terms? Well, instead of a reorganization of the company, they want to liquidate all the assets. Transworld further says that Sierra's lawyers deny that they have converted to Chapter 7. Wow that is great what a carefully worded comment. All this means is that at this moment they have not converted. Doesn't mean it won't happen in the near future. You can read Transworld's report here.
Look, the only reason that there are so many rumors going around, and everything is so unclear is because something off piste is going here. Obviously Mike Harrosh (owner of Sierra) had personal financial problems. Whether he had debts, a gambling problem or was just so nice and gave all his money away these problems leaked into Sierra. He clearly misappropriated the income from the company, which is clear because none of the bills were paid. Not to mention the fact that it is pretty stupid not to pay your suppliers. I mean if your customers pay you to deliver a product you want to make sure the supplier is paid.
Mike mismanaged the money, blew it all and the debts got too big to fix. He probably thought he was getting away with this one, but his name is personally tied to the proceedings. It's a shame because Sierra could have been a good thing. A big retailer too.
*Refer back to this article for future updates & thoughts on the topic as they arise.
Saturday, September 4, 2010
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I think you are mistaken, this bankrupty was actually due to Burton terminating their contract with Sierra after deciding they must stop the discounts and international shipping.
ReplyDeleteFrom a contractual perspective Burton might have been right but I think it's unethical. Sierra owns the gear they get from burton and if they want to give us (the customers) more discount, thus lowering their own margin, why are people complaining.
I understand Burton cant just drop these pricing policies because they will loose competitive power to brand who still use these policies. These brands will generate more profit for sellers and therefore get more of the allimportant instore promotion.
Therefore the real solution is to outlaw these pricing policies, the same way we outlawed cartel forming when we discovered monopolistic powers are harmful to a capitalist economy.
Dear Anonymous,
ReplyDeleteWith all due respect the bankruptcy of Sierra cannot be simply credited to the "Burton Contract" termination. You make a good point regarding pricing however that is also not the sole reason they terminated the contract with Sierra. They were not being paid by Seirra; there is only so much product a company will continue to ship you before your tab gets too big and they stop. Thanks for the input, keep it coming!!
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