The new owner of key outdoor industry account Backcountry is a bit of a mystery in the outdoor space. CSC Generation Enterprise, which acquired Backcountry in September for an undisclosed sum, owns a portfolio of home goods retailers including Sur La Table, One Kings Lane, Touch of Modern, and DirectBuy, and is focused on optimizing backend functions to spur digital growth and profitability.
The Daily wanted to find out more about CSC, so we reached out to the company for an interview with CEO Justin Yoshimura, and we listened to his past interviews on podcasts to understand what may be in store for Backcountry going forward.
Yoshimura agreed to an email interview about the M&A-focused company’s broader accomplishments thus far and how its strategy has evolved since Yoshimura founded it a decade ago.
“Our mission has remained the same: to help brands evolve to ensure they survive and thrive,” Yoshimura said in an email to The Daily.
Additional information The Daily learned from its reporting and from the email interview includes:
- Backcountry is already undergoing change, such as layoffs, leadership changes, and new hires.
- CSC’s run rate in 2022 was $1.5 billion, and the company has grown since.
- AI, automation, long-term planning, and physical retail are all crucial to the strategy at CSC.
- Yoshimura has entrepreneurial experience gained after dropping out of high school to pursue a career in e-commerce. He started CSC with a $4 million investment, and now has a slate of venture capital backers and individual investors that include Wayfair founder and CEO Niraj Shah.
- Sur La Table has profitably grown for the past three years, Yoshimura said.
Yoshimura told podcast Conversations with CommerceNext in 2022 that he started CSC, which specializes in turning around distressed retailers, after he saw multiple brands file for bankruptcy. He thought they could be profitable if they all ran on one consolidated system, whether it be e-commerce, warehouse management, or ERP.
That piece has changed with recent breakthroughs in generative artificial intelligence, Yoshimura said in an email to The Daily.
“However, the business impact of implementing AI and automation is now greater than swapping out legacy systems, allowing our teams to achieve greater efficiency without necessitating system consolidation,” Yoshimura said.
How is Backcountry Changing Under the CSC Generation Umbrella?
It’s not clear what stage Backcountry is at in implementing CSC’s AI and automation tools, and it’s unknown how Backcountry fits in with CSC’s suite of brands. The outdoor retailer is an outlier when it comes to the other brands in CSC’s portfolio which are all home-oriented retailers, suggesting that they’re the building blocks of a home goods empire.
However, while the acquisition just closed last month, its new owner is already making changes.
Kevin Lenau, CSC’s VP of strategy and finance, became Backcountry’s interim chief financial officer in September. Former CFO Judd Tirnauer confirmed in an email to The Daily that he has left the company. An undetermined number of employees have been laid off, according to several posts by former employees on social media. CSC declined to say how many. Backcountry is hiring a new head of digital, who will report to Backcountry CEO Melanie Cox and will oversee every aspect of its digital business.
Yoshimura told the CommerceNext podcast in 2022 that acquiring and transforming struggling businesses is tougher than he thought it would be.
“I thought that this would be easier to do than it has been,” he said. “It is really, really hard. This business is just a very intense, competitive, fast-moving, challenging space.”
And each brand has its own specific needs and requirements.
“One of the biggest challenges with what we do is that there is rarely a single ‘silver bullet’ that solves all of a brand’s problems,” Yoshimura added in an email to The Daily. “Instead, we need to execute on a ton of medium-value initiatives, which come together to make one big win.”
CSC’s Wins at Sur La Table and Other Brands
CSC and Marquee Brands acquired Seattle-based Sur La Table in 2020 out of bankruptcy for $88.9 million. Since then, Yoshimura said Sur La Table has had “great success.”
“Sur La Table is a great success story for CSC Generation,” Yoshimura said. “By leveraging the CSC Generation platform, Sur La Table has been able to profitably drive three years of positive growth, significantly outperforming most of our peers.”
Data drives many of the decisions at CSC, Yoshimura said, and while the company is tech-focused, it is an omnichannel business that also values physical retail spaces.
“Stores, when executed well, can not only be more profitable than digital, but also improve the brand experience,” Yoshimura said. For example, Sur La Table opens several new stores every year, and currently has a fleet of 60 locations, which is more than it had when CSC acquired the brand, he said.
“However, if a store isn’t working out, sometimes a difficult decision needs to be made to close it,” he added.
CSC’s portfolio of brands operates a total of 80 stores, and nine of those are Backcountry stores. In 2022, Yoshimura said CSC had a $1.5 billion run rate. Yoshimura declined to say what its run rate is now, but said the business has grown since 2022.
Who is CSC Generation Enterprise’s founder and CEO Justin Yoshimura?
Born in 1990, Yoshimura dropped out of high school in the wealthy California enclave of Palos Verdes to work on a cellphone e-commerce site. A student with ADHD, he told the CommerceNext podcast that he was frustrated that he had to learn the whole curriculum rather than being allowed to dive wholeheartedly into the subjects that interested him – such as e-commerce.
After working on some entrepreneurial projects such as loyalty marketing company 500 Friends, Yoshimura raised $4 million and started building CSC in earnest in 2016. CSC’s backers include both institutional investors such as Khosla Ventures and individual investors, such as Wayfair founder and CEO Niraj Shah.
CSC’s first acquisition was DirectBuy, which it bought for $150,000 out of bankruptcy along with millions in liabilities. It acquired Z Gallerie in 2019.
Yoshimura is passionate about company culture, writing in 2021 that, “Beginning from a company’s infancy, culture must not only be consciously nurtured, but to promote durability and success, it needs to evolve in harmony with the corporate mission.”
At CSC, long-term planning and thinking is crucial to the culture he’s trying to grow, which distinguishes it from private equity companies and their short-term expectations for a return on investment, he said on the CommerceNext podcast.
“It takes six months of planning, a year of execution, and then you see the benefits a year later,” Yoshimura said of the post-acquisition strategy. “And so you really need to think in terms of five years, 10 years, 15 years in this business. But because people think so short term, they try to force these retailers (to) grow faster than they should naturally be growing.”
Kate Robertson can be reached at [email protected].