All-terrain stroller maker Mountain Buggy has declared bankruptcy and is looking for a buyer, according to a report in local NZ newspaper.
After laying off 25 employees in December, Mountain Buggy still has 89 staff and is trying to keep its manufacturing plant open while it looks for a new buyer.
The company gained international fame when one of its strollers were credited in saving an infant from a building collapse in New York City in 2005.
Mountain Buggy's parent, Tritec Manufacturing, "had some significant debts" and suffered from the economic slowdown, seeing its sales fall by a third in the past year. In recent years, Mountain Buggy increased prices—that made their flagship Urban stroller nearly $600. That left them vulnerable as demand for high end strollers has fallen sharply in recent months (see our previous post on Bugaboo's woes).
While most strollers are made in China, Mountain Buggy kept production in their native New Zealand. Those higher costs were probably a factor in the bankruptcy.
UPDATE 1-27-09: We spoke with an owner of Mountain Buggy's North American distributor, Sycamore Kids, and got more detail on the bankruptcy. First, Sycamore Kids is "optimistic" that Mountain Buggy will find a buyer within a few months. The bankruptcy for Mountain Buggy stated in a newspaper report that he hopes a deal will be done by April.
We also learned Mountain Buggy racked up about $11 million (U.S.) in debt over the last few years, modernizing their plant, buying out their European distributor and investing in new marketing/packaging. When sales collapsed last year (this person didn't dispute the estimated 33% drop in sales), the debt service became overwhelming.
Mountain Buggy said they needed to raise prices when the American dollar slumped in recent years, making their New Zealand production more expensive to sell here. But jacking prices was a risky move—when the economy soured, sales tanked.
So the key question: will someone buy the company so it can continue? That's a big question mark there—with financing difficult to come by, a buyer must bring cash to the table. Whether Mountain Buggy finds a buyer quickly before the bank pulls the plug is the biggest question hanging over the company.
For now, the company continues on, strollers are being made and warranties honored. BUT. . . if they liquidate and close, warranties will be useless and parts impossible to come by.
In other Mountain Buggy news, competitor and fellow Kiwi Phil & Ted issued a press release, taking a shot at MB's woes and the US auto bailout. As reported by the New Zealand Herald:
Phil& Teds, which also produces baby buggies, said in a flippant press release that it rejected pleas for a multi-billion dollar bailout of the baby buggy industry – parodying moves for a United States auto industry bailout.
"While it's true that the New Zealand buggy industry has halved overnight, our half is going absolutely gangbusters, just quietly; not to dance on their grave at all," said phil&teds' "chief cook and bottle washer" Campbell Gower.
All joking aside, Phil & Ted's tells a local New Zealand newspaper they might be interested in buying Mountain Buggy. Phil & Ted's said sales for their strollers rose 50% in 2008.
We will update this situation as we get new info!