Sports Authority faces possible bankruptcy
Time could be running out for Sports Authority. The sporting goods retailer missed a $20 million debt payment a month ago, and could be days away from a bankruptcy filing.
The company said it has been in negotiations with lenders.
But if it doesn’t reach an agreement with lenders or make the payment by Sunday, it will be in default on all of its other loans, according to credit rating agency Standard & Poors.
“We do not expect a payment to be made during this time frame,” said an S&P note downgrading the company.
Moody’s also expects the company to default.
The company declined to comment on the state of negotiations with its lenders or a possible bankruptcy filing.
Sports Authority is just the latest retail giant to fall on hard times as more and more shopping moves online. RadioShack, Circuit City, Sears, Macys and Barnes and Noble are just a few of the chains that have either filed for bankruptcy or had to close a lot of stores.
It is likely Sports Authority will have to close between 200 to 250 of its 450 stores, said Larry Perkins, of SierraConstellation Partners, an expert in retail reorganizations. The bankruptcy process is key to getting out of leases at the money-losing stores, he said.
Perkins said he thinks the privately-held chain can survive, but only if it gets much smaller.
Sports Authority was once arguably the nation’s largest sporting goods retailer, but it has been overtaken by Dick’s Sporting Goods, which has grown by providing a more high end shopping experience.
“Someone who wants to shop in a brick-and-mortar store and try on the baseball glove,or get the feel of a golf club, wants a better shopping experience,” said Perkins. “That’s not Sports Authority any more.”
In addition to Amazon.com, the company is also facing growing competition from specialty sites such as Fanatics or NFL.com or NBA.com, as well as newer stores like Lululemon Athletica.
“You used to go to Sports Authority or some other store to buy your fan gear. Now it’s much easier to find online,” he said.
Sports Authority spends $6 million a year to have its name on the stadium that is home to the Denver Broncos, which just won the Super Bowl this week. Whether that 25-year naming rights deal will continue if it does go bankrupt is unclear.