Modell's Sporting Goods has reportedly hired restructuring adviser Berkeley Research Group to explore next steps for the company, including a possible bankruptcy, the Wall Street Journal reports.
While a restructuring is not certain, the retailer is struggling under pressure from big-box retailers and online competition, people familiar with the matter told the Journal. One source remarked that the athletics retailer's expansion outside of its key New York market was partially to blame for the current financial situation.
Berkeley Research Group has worked with many struggling retailers in the past few years, including Destination Maternity and Charlotte Russe, among others. Neither Berkeley Research Group nor Modell's immediately responded to Retail Dive's request for comment.
While it's far from certain whether or not Modell's will file for bankruptcy, the reasons for its financial troubles are not unique. Modell's is in good company when it comes to specialty retailers that are finding it difficult to thrive amid competition from big-box retailers and e-commerce.
This year alone, children's retailer Gymboree filed for its second bankruptcy in two years, citing pressure from close competitors Gap and The Children's Place (which ended up buying up its brands in bankruptcy), as well as "indirect competition" from tangential players in the space, including discount and big-box retailers.
Specialty retailers make up the majority of the retailers who have filed for bankruptcy this year, according to Retail Dive's tracker, which now includes Things Remembered, FullBeauty and Payless, the last of which liquidated after filing its second bankruptcy in as many years.
Modell's, for its part, is operating in a crowded sector with stiff competition from multiple sides. On one hand, older players like Nike and Dick's Sporting Goods are holding their own, though the most recent quarter for Dick's showed some weakness in sales and net income. On the other side, younger niche players like Lululemon and Outdoor Voices are making names for themselves as go-to retailers for young, female customers.
While that hasn't kept Nike from challenging Lululemon in the trendy yoga space to try and grab a more casual yoga practicer, Lululemon has shot back with its first ambassador in the NFL. Modell's position as a regional athletics retailer could make it difficult to compete as either a niche retailer, like Lululemon, or as a more general specialty player, a space held soundly by the likes of Dick's and Nike.