Sports Authority is accelerating its liquidation of stores as it continues to do battle with lenders and suppliers in its Chapter 11 bankruptcy proceedings. All of its stores could be shuttered by the end of the month, according to multiple employees and managers that talked with the Wall Street Journal.
Store managers of previously well performing stores, who held out hope that some stores would survive, have been told to make the final moves to close up shop, sources told the Journal.
The company wouldn’t confirm to the Journal whether some stores would stay open into August, which was the original plan laid out by CEO Michael Foss in a letter to customers in May.
After a elongated auction, Dick's Sporting Goods last month won the right to Sports Authority's intellectual property with a $15 million bid, the best chance the Sports Authority name has at survival. Now, as lenders that say Sports Authority owes them $240 million and suppliers that have shipped an estimated $50 million of goods come calling, the retailer seems to be shuttering all stores early.
Closing stores a month early would save Sports Authority many much-needed dollars in rent. But as the Journal points out, it's also putting the 14,000 employees it once supported in a tough spot, depriving them of a month of wages, job stability, and health insurance.
As its operations wind down, the retailer is a slim shadow of its former self. Sports Authority was once the largest sporting goods chain in the U.S., and in 2006, when the retailer was acquired by private equity firm Leonard Green & Partners for $1.3 billion, its future was bright. But mounting debt, weak e-commerce returns and increased competition, including from general merchandise brands like Wal-Mart, Target, and, of course, Amazon, and from apparel retailers like Gap, took it down. The retailer filed for bankruptcy protection in March.
Matt Powell, a sports industry analyst at the NPD Group, last month said that Sports Authority stores could provide Dick’s a natural way to create an off-price chain using the Sports Authority name. Off-price retail, led by TJX Cos., is a thriving area in retail, though there’s some evidence that retailers with flagship brands suffer some cannibalization by their off-price efforts.