Divers Direct Orlando

[mike_s]

when you see the liquidation sale at Leisure Pro, you know this industry is in a tail spin that it can't recover from....

 

[fisheyeview]

I don't know the situation at Divers Direct. They are certainly a big player in the scuba industry in the United States. Anything that happens to them is an indicator of the industry as a whole.

If you will take a look at scuba store closures (these days and in the past), the first ten days of the month are the most likely days to be "show stoppers" for the average scuba store. The vast majority of local scuba stores are property tenants, not property owners. If you are a property owner, you can likely get away with "missing" a monthly payment. It is much easier to contact the lending institution and "negotiate" your way through hard times. If you rent, most commercial leases are much less forgiving. When the first of the month rolls around, you have to have the cash to pay the rent IMMEDIATELY. Failure to pay rent in a timely manner triggers a rather rapid sequence of default clauses that result in quick eviction. In many cases (depending on state law), failure to pay within 5, 7, or 10 days can result in a landlord locking you out of your property, and seizure of inventory and equipment to cover the the future lease costs. I know of one store in Florida that faced that same fate in the past two months. When the first of the month came around, there was no money to pay the rent. Within 7 days, the owner saw the writing on the wall. Now, it doesn't matter that there were expected sales over the next week that would allow payment of the rent. The corporate development landlord simply stated their intention to enforce all paragraphs of the lease. The scuba store owner made a choice, and pulled the plug.

Trust me....ALL of us in this business face the same issues. I am sure that Divers Direct made a calculation based on the current economic situation and did what they thought best.

Phil Ellis
www.divesports.com

Here in Florida it's a little more debtor friendly. Some people don't know the process involved (probably like the person you just mentioned) and run out.

As a landlord I can't just lock a tenant out that does not pay. That is an illegal eviction, and I could be sued by the tenant.

In order to get possession of a leased space before the end of the lease term 1 of 4 things has to happen:
1. The tenant surrenders the premises. This does not alleviate their rent obligation, but it gives me the ability to re-lease it and mitigate their potential damages.
2. There has to be obvious signs of the tenant abandoning the space, i.e. they move everything out. Same about their obligation above applies to this one.
3. There is no sign of activity in the space for 30 days, and I can not get a hold of them. Same damages apply.
4. The court had to issue a Writ of Possession, and the sheriff has to serve a warrant, and we lock them out. I first have to serve a "3-day demand notice". This gives them 3 business days to pay what they owe. If they do not pay in full then I have the right to file fore eviction. Depending on how long it takes my attorney to file the eviction, and serve the tenant this could take a week or more. The tenant then has 20 days in which to file a response to the eviction complaint. If they do nothing then we have to file for a default judgment. It depends on how busy the judge is, but this can take a week or two. Once the default is granted by the judge we then have to file for the Writ of Possession. Another week or two. Once this is granted it is sent to the Sheriffs office. It might be a week or more before they schedule a date to serve the warrant. This process may take as little as 45 days (if the tenant does nothing at all) to sometimes 6 months or more if the tenant knows how to play the game with legal motions. If they do know what they are doing just before the sheriff comes out they file for bankruptcy which usually ads 2 to 6 months on to the process.

 

[Buoyant1]

I don't know the situation at Divers Direct. They are certainly a big player in the scuba industry in the United States. Anything that happens to them is an indicator of the industry as a whole.

If you will take a look at scuba store closures (these days and in the past), the first ten days of the month are the most likely days to be "show stoppers" for the average scuba store. The vast majority of local scuba stores are property tenants, not property owners. If you are a property owner, you can likely get away with "missing" a monthly payment. It is much easier to contact the lending institution and "negotiate" your way through hard times. If you rent, most commercial leases are much less forgiving. When the first of the month rolls around, you have to have the cash to pay the rent IMMEDIATELY. Failure to pay rent in a timely manner triggers a rather rapid sequence of default clauses that result in quick eviction. In many cases (depending on state law), failure to pay within 5, 7, or 10 days can result in a landlord locking you out of your property, and seizure of inventory and equipment to cover the the future lease costs. I know of one store in Florida that faced that same fate in the past two months. When the first of the month came around, there was no money to pay the rent. Within 7 days, the owner saw the writing on the wall. Now, it doesn't matter that there were expected sales over the next week that would allow payment of the rent. The corporate development landlord simply stated their intention to enforce all paragraphs of the lease. The scuba store owner made a choice, and pulled the plug.

Trust me....ALL of us in this business face the same issues. I am sure that Divers Direct made a calculation based on the current economic situation and did what they thought best.

Phil Ellis
www.divesports.com

Well when you look at how close Florida City is to Key Largo, and then see that they were supposed to open a store in Marathon in spring 2008 (that was on the calendar LAST year) then see that they have a store in Key West, you can almost imagine that with this cruddy economy something was going to have to budge with so many location in a (semi-) close proximity. I'd rather see a location closing than prices go
up!

Probably just a good business decision for that area...

 

[PhilEllis]

when you see the liquidation sale at Leisure Pro, you know this industry is in a tail spin that it can't recover from....

The assumption that Leisure Pro is the "strength" indicator of this industry may or may not be true. In my opinion, for the industry as a whole and for dive consumers, there are other potential and hypothetical closures that would be a far more troubling indicator.

Phil Ellis
www.divesports.com

 

[mike_s]

The reference of Leisure Pro liquidating was in reference to them being one of the largest "dealers" (in sales number) in the country. supposedly the largest. They've got a lot of inventory.

However if another giant such as Scuba.com went into a "tail spin" (or dead spin), then I doubt there would be as much of a liquidation sale based on the speculatoin that Scuba.com doesn't keep as much inventory on hand and gets quick drop shipments to fill orders from Califorinia based scuba distributors.

what if ScubaToys went out of business? with an estimated $5million to $6 million in sales a year.


but one thing is for sure. All these shops are facing the same slow downs that all LDS's are facing.

 

[cerich]

The reference of Leisure Pro liquidating was in reference to them being one of the largest "dealers" (in sales number) in the country. supposedly the largest. They've got a lot of inventory.

However if another giant such as Scuba.com went into a "tail spin" (or dead spin), then I doubt there would be as much of a liquidation sale based on the speculatoin that Scuba.com doesn't keep as much inventory on hand and gets quick drop shipments to fill orders from Califorinia based scuba distributors.

what if ScubaToys went out of business? with an estimated $5million to $6 million in sales a year.


but one thing is for sure. All these shops are facing the same slow downs that all LDS's are facing.

5-6 million a year??? Are you talking sales done on Tuesdays?

 

[mike_s]

that was what they boasted in a press article a year or two ago. I haven't kept up with or checked since. I doubt they've increaed that 5 fold though in the last year or two with the economy and down market. maybe I'm wrong (I'm not their book-keeper).

 

[cerich]

that was what they boasted in a press article a year or two ago. I haven't kept up with or checked since. I doubt they've increaed that 5 fold though in the last year or two with the economy and down market. maybe I'm wrong (I'm not their book-keeper).

I was just having fun, well i suspect they do more than that I don't know either. I know a couple years back Scuba.com was boasting 17 mil in sales, I "think" that LP is larger.

 

[mike_s]

Numbers I've heard in past years was that:

LP did 15 to 20 mil a year in sales.
Scuba.com did 12-14 million in sales.
ST did 5-6million a year in sales.

now I've heard different amounts over different times from different folks. the above numbers are just a generalization of what I've heard and not direct quotes as I'm sure as information is "passed" it's subject to change slightly.


not hard to find some supporting information now days...

This article says that ST did $5million in 2007
Mid-Market Heroes: Scuba Toys -- Scuba Community Dives into Web 2.0 | Hardware & Software | bMighty.com

This article says ST did $250k in 1998 and $2million in 2002
StoreFront Merchant ScubaToys Wins Cisco Award. - Free Online Library

That is also supported by this PDF on ST website
http://www.scubatoys.com/press/cisco.pdf

one more article about ST sales figures
Meet Larry Dague from ScubaToys.com | Scuba Herald

plus other articles and profiles. of course none of this information is guarentee'd completely correct as any businessman wouldn't give you his complete accounting record or sales numbers.... after all they are in business to compete and be successfull.

EDIT:
This sept 2008 article says scuba.com does $12mill in sales
http://www.ocbj.com/industry_articl...03008.1678781.5771719.8242515.427&aID2=129128

 

[Johnoly]

... Some people don't know the process involved (probably like the person you just mentioned) and run out.

DD was not renting they owned it. According to Orange county property assessor, Holiday Divers (parent/dba/etc of DD) owns the Orlando property and valued at 1.37 million. It is titled under a separate LLC so they could default on that LLC agreement and still keep the rest of the operation running. No foreclosure suits have been filed yet in Orange County on the property.

Cash flow is king and I'm sure this was a very difficult decision for DD, since this will scare vendors who are suppliers. Next, those vendors will be watching outstanding invoices and eliminating terms and demanding COD when they are unsure. COD is the kiss of death to any retailer.