Filmar Corp., a Montreal, Canada-based, company and owner of the Bula brand, agreed to acquire the assets of Merkley Headgear after being named the winning bid by trustee Deloitte & Touche on April 22.
As we reported in our April 6 Outdoor: Did You Hear?..., Merkley Headgear was forced into receivership at the end of March when the company defaulted on a $6 million loan with HSBC Bank Canada.
Filmar, which produces OEM goods and is the Canadian licensee of O'Neill Inc. in addition to being the owner of Bula, will move Merkley from Toronto to the company's Montreal base.
Murray Merkley, who was the founder and president before being fired when the company entered receivership, has been hired by Filmar to head up the sales, marketing and design of the Merkley brand business.
Merkley will be operated as a separate business with a completely separate design team, sales force, customer service team and warehouse, according to Leonard Markovitch, Filmar vice president of finance.
Markovitch told SNEWSÂ® that Filmar sees the Merkley acquisition as a perfect fit with the company's existing Bula line since Bula is more of a lifestyle brand, and Merkley is more an "authentic ski brand targeting high end and resort buyers."
Just as Filmar did with Bula when it acquired the brand just over three years ago in quite similar circumstances, the company will likely begin adding base layers, sweaters and other apparel options to the line, though perhaps more gradually, Markovitch also told us.
There is little doubt that Filmar believes Merkley has great potential here in the United States and, eventually, abroad.
"The Bula brand has very healthy sales in the U.S. and internationally, and we would expect that we will be able to significantly grow Merkley's penetration into the authentic ski market in the U.S. and perhaps eventually into the international market too," said Markovitch.
In the meantime, Filmar is already hard at work ramping up production in its company-owned factory to ensure it can fulfill retailer orders that have already been placed. Markovitch told us he fully expects to be able to ship the majority of orders since, "manufacturing and shipping product on time is something we are traditionally very good at."
SNEWSÂ® View: Merkley, which vaulted into the spotlight at the 1988 Calgary Winter Olympics, has had a mostly healthy life, with a hint of trouble beginning to show in 2003, according to folks who talked with us. In 2003, Merkley lost around $70,000. However, the trouble really began when the company acquired Harris Cap without adequate capitalization. Off shore competition also has been singled out as a reason profits began to dip in 2003. We'd also imagine the number of SKUs the company has can't be healthy either. Variety is one thing, but a glance at a recent catalog was mind-boggling. No way to produce that much variety and maintain a grip on profitability. No doubt, the creditors who received little or nothing for their troubles will be miffed, since many still have to deal with Merkley, and continue to deal with Filmar. However, we suspect they will soon get over it. Filmar is a solid citizen with a very good track record. What it has managed to do with Bula is more than respectable. If it can do the same with Merkley, folks will soon forget they were once left holding a bag of empty promises and be thankful they are enjoying the rewards of being associated with a now successful and growing business. Oh, and we'll go out on a limb here and imagine that for the coming year, Merkley's catalog of hats will become much leaner and far more targeted.