REI Announces Exit of Experiences Business

SUMNER, WASHINGTON (January 8, 2025) – REI Co-op announced the exit of its Experiences business, which includes adventure travel, day tours and classes, after 40 years.

Below is a message from REI president and CEO Eric Artz that was shared with all co-op employees and posted on the REI website on January 8, 2025.

Team,

I have an important update to share today. Earlier this morning we shared with our Experiences team that after a thorough review and careful consideration, I have made the difficult decision to exit the Experiences business altogether, effective this week.

The reality is a thriving co-op requires a sustainable economic model that is capable of investing at the appropriate level to fully fund our most critical strategic ambitions. While we are still in the process of finalizing 2024 results, our preliminary financials indicate we will be close to break-even for both Pre-Dividend Operating Income (PDOI) and Free Cash Flow (FCF).

This is a significant improvement over 2023, driven by our intentional focus on increasing full-price sales mix and gross margin, effectively managing inventory to improve in-stocks and inventory turns and carefully managing costs to optimize our spending. I greatly appreciate the work by teams across the co-op to deliver these improvements in 2024, which is a positive step in our journey to return to a healthy economic model. At the same time, we still have more work to do to return the co-op to sustainable, profitable growth, which brings me back to today’s decision.

First, I want to acknowledge and extend my gratitude to the Experiences team for all they have done and accomplished over the 40 years of its existence. You have done what has been asked of you, you have worked extremely hard, you have brilliantly educated and created wonderful experiences for nearly one million people over those years. Perhaps most importantly, I want you to know from me that you have done nothing wrong when it comes to the choice I am sharing today.

Second, it is important we all understand the economics of the Experiences business. Experiences served 40,000 customers in 2024 — less than 0.4% of all co-op customers — and costs significantly more to run than it brings in. When we look at the all-up costs of running this business, including costs like marketing and technology, we are losing millions of dollars every year and subsidizing Experiences with profits from other parts of the business. Even at our peak in 2019 — our best year for Experiences ever — we did not generate a profit.

Third, we have gone through many iterations and explored multiple options to keep this business up and running and to preserve jobs. We’ve held out as long as possible, but the fact remains that Experiences is an unprofitable business for the co-op, and we must adjust course. Every path to profitability we explored would have required us to invest more time, effort and focus away from parts of the business that reach significantly more customers, drive more positive financial outcomes and have greater impact on our mission to get people outside.

Commitment to Our People

While this is the right decision for the future of our business, it will have a significant impact on people. Specifically, the 180 full-time employees and 248 part-time guides in our Experiences division whose jobs will be eliminated as we close this business.

We have some of the best Experiences guides and staff in the business and are committed to making this transition as smooth as possible.

• Every full-time employee whose job is eliminated will continue to receive their regular salary through March 9, 2025 and remain active on benefits through the end of March. They will also be eligible to receive separation benefits including severance, healthcare coverage continuation via COBRA, and outplacement service support.
• Shared employees (employees who split time between Experiences and Stores) will have a conversation with their store manager later today to learn what options exist for each employee to continue employment in a store capacity based on their employment status and ability to meet the necessary availability standards.
• Part-time employees will remain benefits-eligible through January 2025 and will also be eligible for a severance payment.
• All impacted employees will receive a Summit payout for 2024, depending on actual co-op performance vs. plan and remain eligible for future roles at the co-op.

Commitment to our Customers and Partners

This week we will also begin updating customers and partners. Customers currently booked on trips and day programs will receive a full refund of all costs paid to REI and we will work to address any associated non-refundable expenses as appropriate.

We know this decision will also significantly impact many of the travel partners that we work with across the U.S. We will begin informing partners this week and will work with them to terminate our existing contracts.

Focusing on the Core

Given the current business landscape and our strategic priorities, we must invest selectively, focusing our efforts in the areas that align most closely with our long-term commercial goals and set us up to deliver on our mission and purpose for another 86 years.

We continue to believe there is a role for REI in outdoor education and expertise. However, we need to reexamine and rework how we deliver classes and education to ensure they’re relevant to our customers, aligned to our mission and financially viable. We are funding a small team to innovate and test in this area in 2025. We also continue to believe in the importance of local community-building. We will continue to invest in local marketing and customer engagement, and the local marketing team will move back into the marketing organization to unify similar bodies of customer-facing work.

Our goal must always be the long-term financial health of the co-op, and while today’s decision is a difficult one, it is necessary. Reinvesting our resources into these core areas will enable us to drive healthy, profitable growth for the co-op in the future.

Specifically, we will be focusing our resources in areas such as:

• Driving growth in our priority activities (Camp and Backpack, Run, and Hike and Outside Life) in service of our core customers and best members.
• Investing in tools to help us more effectively manage inventory, which will improve sales, profitability and liquidity by driving improvements in in-stocks, locally relevant assortments and inventory flow.
• Continuing to enhance the customer experience online and in stores with investments in areas including personalization and visual merchandising.

Our roots are in the gear and apparel we sell and the outdoor moments they enable. This has been the core of our business for 86 years—and I believe when we stay focused on what we do best, we can and will succeed.

As a cooperative, we are organized to drive a healthy, profitable business that allows us to serve our members, our employees and society, and fully fund commitments like the annual Member Reward, employee profit-sharing and support for nonprofits. We’ll share more about our long-term plan to do so next month.

I know that this is difficult news. The next few weeks will continue to be tough as we unwind an iconic part of our business and say goodbye to colleagues. Teams whose work is impacted should work with their leaders to understand what comes next. Today should be about processing this news and caring for impacted colleagues.

Please continue to take care of yourselves and each other.

Eric

REI is a longtime member of the National Sporting Goods Association (NSGA).