Retail chain Sports Authority reported last week that it will be shutting down all the remaining 463 stores as the chain is sunk deep in debt. The retail giant has filed for Chapter 11 bankruptcy protection in Delaware and will auction off all its assets on May 16 in order to save its finances. The company has more than $1 billion in debt.
Sports Authority had earlier announced that it would be closing down only 140 of its remaining 463 stores. But as the month progressed and its stocks tanked, the retail outlet decided to give up altogether. The company is looking into a merger and acquisition angle, hoping for an interested buyer to change the game. By mid-May, the sporting goods chain will liquidate all its assets and pull the shutter on all its stores in the next few months.
However, if rumors are to be believed, Sports Authority will still not be able to pay off its creditors, despite complete liquidation. During the bankruptcy filing, FTI Consulting Inc., the financial consultant for the retail chain, said that the liquidation process could cover $100 million in administrative costs. The debt, as mentioned before, is more than $1 billion.
Dick’s Sporting Goods, a rival company, has expressed interest in taking over Sports Authority. However, there is no official announcement. Ironically, 10 years ago, Dick’s and Sports Authority both had annual sales topping $3 billion.
Too Many Chains Closed Recently
Too many retail chains have been closing down either completely or partly because of underperformance and debts. Some have been closing down the brick-and-mortar stores because of online competition. And some have just not been able to justify their sales figures as compared to paying their employees. Macy’s announced last year that in 2016, it will shut down at least 40 underperforming stores across the country. Barnes and Noble has discussed plans of going out of business by 2023. Kohl’s will be also putting 20 stores out of business this year because of its poor sales. Sears, thanks to its tanking stock and horrendous sales figures, will close another 50 stores this year. J.C. Penney has reported a somewhat amazing quarter. Yet, it announced that it will be closing seven more stores this year – in addition to closing down 74 last year.
While it may be macroeconomic factors, such as poor performing stocks and disappointing sales figures, some stores have closed down to downsize and cut down on expenditures.
By Priyam Vora