Austin Canoe and Kayak, the Texas retailer that grew into a regional powerhouse and stretched its e-commerce tentacles from coast to coast, is no more. ACK’s five retail stores were shuttered New Year’s Eve, together with four Summit Sports locations in Michigan. ACK and the snow sports chain merged in 2016 with private equity financing from Digital Fuel Capital.
Though the closure came with no notice to customers or rank-and-file workers, former employees told Paddling Business the writing had been on the wall for months. As paddlesports retailers across North America scrambled for inventory to meet unprecedented customer demand, ACK didn’t put in fall orders even though ACK and Summit Sports’ parent company had obtained an $8.2 million credit facility at the end of September.
“There was massive demand and no supply,” said former ACK General Manager Juan Carlos Andreu. “By the end of it we had no Hobies, no Wilderness Systems, no Johnsons. The warehouse was empty.”
The hammer finally dropped on December 31. ACK’s stores in Austin, San Marcos, San Antonio and two Houston locations were shuttered without notice. Non-retail employees were given a modest severance, while retail staffers who agreed to stick around to clear out the stores received retention bonuses. That work was completed last week.
Just like that, one of paddling’s enduring retail success stories was a pile of ashes.
Camping World subsidiary The House scooped up the remains. The outdoor e-commerce business acquired the leftover inventory of both Summit Sports and ACK, as well as domains, trademarks, lists and other intellectual property. The ACK website now redirects to a page on TheHouse.com offering 65 paddling-related items and a pitch for ACK’s customers: “Austin Kayak may have closed it’s [sic] doors … but The House is here to pick up where they left off as your online dealer for outdoor gear!”
ACK and Summit Sports assets were liquidated in an assignment for the benefit of creditors, a legal device used as an alternative to formal bankruptcy. “It doesn’t go in front of a judge,” Andreu said. “You basically sell everything and all the vendors just have to get in line and try to figure it out if there’s anything left.”
The sudden closure left ACK customers wondering what would become of pending orders, and whether the new owners would refund the gift cards ACK sold right up to the end. The House’s response: don’t hold your breath.
“I was able to get an answer about when we’ll be able to fulfill the ACK inventory, sounds like it will take a few months to get things transferred to our new warehouse in California and we are hoping to be able to offer those items around April,” a rep from The House told long-time ACK customer Anthony Joseph in an online chat. When Joseph pressed about a refund for the $200 ACK gift card he received over the holidays, the response was equally Kafkaesque. “Not sure at this point, just hold on to it for the time being and if we need to we can always exchange it for credit at The House.”
That’s cold comfort for customers like Joseph, an avid kayak angler who bought three kayaks from ACK in five years. The House website that replaced ACK’s sprawling online store lists just 11 kayak models, mostly low-end inflatables and hardshells from Erewhon, the house brand Camping World bought out of bankruptcy five years ago.
“What happened with ACK?” customer Cesar Miranda commented on ACK’s Facebook page. “I was going to buy some stuff and it looked like I was on Alibaba.”
Brothers Steve and Peter Messana founded Austin Canoe and Kayak in 2005. Starting from a single store in an Austin industrial park, the brothers spent the next decade building ACK into a retail and online powerhouse, with five stores in central Texas and a nationwide e-commerce site that became the envy of the paddlesports industry.
In January 2016, ACK merged with Summit Sports, a regional retail ski chain with four stores in Michigan and a portfolio of e-commerce sites, including Skis.com, InlineSkates.com and Snowboards.com. Steve Messana says he and his brother thought they could apply ACK’s winning formula to a complementary outdoor business. Instead, the opposite happened.
ACK’s online business had flourished after the Messana brothers began offering free or low-cost shipping on kayaks nationwide. The formula only worked with a combination of low overhead, volume orders from manufacturers and sweetheart shipping deals—and it came about by accident, Steve Messana said.
When ACK launched its website in December 2005, Messana viewed it as a replacement for print catalogs, which were quickly going the way of the dinosaur. “We put everything online, and when we got to the boats we said, ‘What happens if somebody wants to ship it?’ And we were like, ‘Nobody’s going to want us to ship it, but let’s just throw a $75 shipping fee on there.’ We literally made that number up.”
The first online kayak order came days later, and ACK spent several hundred dollars to ship the boat. As the number of online boat orders quickly ramped up, the brothers were barely breaking even. “Kayaks are not a square,” Messana said. “They don’t weigh much but they take up space and most shippers apply their normal charges, making them super expensive to ship.” The breakthrough came when the brothers convinced Estes Express Lines to look at it differently.
“Estes looked at kayaks as something that could go on top of all the other freight in their trucks, so to them it was free money,” Messana said. “We developed a really good relationship with them and got our shipping cost way, way down—lower than anybody I’ve ever talked to was able to ship a boat for.”
For years ACK offered free shipping on kayaks, eating about $150 to $170 in shipping costs with every sale. That left a modest margin if they were careful. They kept inbound shipping costs low by ordering in volume, and paid up front to get the best pricing. By 2015 ACK had five thriving retail stores, and an online business accounting for 42 percent of sales. (By 2021, ACK’s shipping costs had increased and the company was charging $199 shipping for kayaks.)
ACK seemingly had cracked the code, combining brick-and-mortar specialty knowledge with the reach and efficiencies of e-commerce. When private equity came courting in 2015, Steve and Peter Messana thought they could repeat the ACK formula in the ski business. ACK and Summit Sports merged in January 2016 as Outdoor Adventure Brands with private equity financing from Digital Fuel Capital.
The brothers stayed on for about two years in the combined enterprise, Steve as VP of merchandising and Peter as CEO, but integrating the two businesses turned out to be a heavy lift. Rather than replicating the ACK success in a new market, the Summit Sports partnership became a drag on ACK, former employees say.
Most of the buying responsibilities fell to people who had come up in the Summit side of the business. In the beginning ACK was in the habit of pre-paying to reduce overall costs and frequently updating or changing orders to meet customer demand. Summit was built on a pay-as-you-go model, with much less flexibility. “If you run out of red kayaks, it is what it is,” Andreu said. “You sell them blue kayaks.”
Parent company Outdoor Adventure Brands churned through three CEOs in four years and many senior managers lacked experience in the trenches of outdoor retail, former employees said. “They didn’t really understand the business but they were the ones making a lot of the decisions,” Andreu said. “We would want to go one way because we were running the business and knew what worked. And these guys would look at a spreadsheet and make a decision that went the other way.”
By the fall of 2021, ACK had stopped ordering new inventory. The company, whose pay-in-advance policies used to rack up magazine “best retailer” awards voted by manufacturers, had by 2021 earned a reputation for late payment. Some vendors flatly refused to ship boats to ACK until the accounts were brought up to date.
Apparently that didn’t pencil in the spreadsheets. On September 29, Outdoor Adventure Brands received an $8.2 million credit facility from Tiger Finance, a creditor focused on “transactions that include an e-commerce platform or consumer brand as a collateral component,” according to an October news release.
“As OAB gears up for a busy 2022, this $8.2 million credit facility better positions its brands to capitalize on the expanding sporting goods market,” Tiger Finance Managing Director Andrew Babcock said in the release. “We are thrilled to partner with OAB on its go-forward strategy.”
But OAB never made it to 2022. ACK’s five stores closed their doors on New Year’s Eve, as did Summit Sports four Michigan locations. When the news broke on social media and Texas kayak angling forums, discussion quickly turned to who, if anyone, would step up to fill ACK’s role. Of the three major markets the retailer served – Austin, San Antonio and Houston – only Houston now boasts a full-service kayak retailer.
“There’s a huge void in Texas,” Steve Messana said. “If somebody came in like Peter and I did 16 years ago, it could happen all over again. The opportunity for dealers is still strong but it’s got to be a hands-on business.