- Sports apparel retailer Sports Authority filed for bankruptcy early Wednesday morning.
- The news was announced in a statement from CEO Michael Foss posted to the retailer's website. Sports Authority said it will close or sell around 140 stores and two distribution centers in the coming months as part of the process. Foss told the Denver Post that the company plans to let go around 3,400 of its 15,000 employees.
- Both the Wall Street Journal and Bloomberg reported Tuesday that Sports Authority was planning to file for bankruptcy. According to the Journal, the retailer, which is at least $643 million in debt, will receive up to $595 million in bankruptcy protection from lenders including Bank of America, Wells Fargo & Co., J.P. Morgan Chase & Co. and TPG. Sports Authority is also under threat of shutting down completely if it fails to find a buyer in the upcoming weeks.
It seems like Sports Authority's long road to bankruptcy is at an end. Its dire situation was first reported early last month, when Bloomberg said that the retailer was in talks with bondholders. News of missing payments to suppliers and a failure to pay a $20 million interest payment soon followed, as well as store closings and employee layoffs. Sports Authority is said to be considering selling some of its stores and intellectual property to rivals Dick's and Modell's.
Foss in his statement attributed the move to "the changing retail environment," a neat encapsulation of a huge struggle that every retailer is dealing with. While the sports apparel retail space seems to be bright, competition has intensified as more brands have entered the game, including "athleisure" brands like Lululemon, big-box stores like Wal-Mart and Target, and online players like Fabletics and Amazon. Dick's, seeing the same pressure, has diversified its offerings with a new fitness boutique, Chelsea Collective, which stocks pricey and fashionable leggings and gear for the much sought-after women's athletic market. While Chelsea Collective is currently only in two locations, it's a smart move by Dick's to capture the "athleisure" customer who is willing to spend on clothes that can easily transition from a morning yoga session to brunch with friends.
In his statement, Foss said that Sports Authority has "a long-term plan to streamline and strengthen our business so we can continue to make necessary investments in our operations, including upgrading our in-store experience and enhancing our website."
In a somewhat ironic twist, the risk of Dick's encountering antitrust concerns if it were to acquire some Sports Authority stores is low, according to a Bloomberg Intelligence analyst, due to the high degree of competition in the space.