By Barry Janoff
March 2, 2016: With emphasis on the evolving way that people shop and stating that "We are taking this action so that we can continue to adapt our business to meet the changing dynamics in the retail industry,” national sporting goods retailer Sports Authority has "filed voluntary petitions to restructure under Chap. 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware."
As part of the restructuring, Sports Authority said it is exploring a "potential sale of some or all of its assets" and initially has identified "approximately 140 stores and two distribution centers, in Denver and Chicago," that it intends to close or sell in the coming months.
There was no mention how this would impact short- or long-term the company's naming rights to the field (but not the stadium) that is home to the NFL's Denver Broncos, Sports Authority Field at Mile High Stadium.
Ironically, an ad for running shoes on the company's Web site states, "Redefine your run."
The Englewood, Col.-based company said the decision to file for Chap. 11 follows a "comprehensive review of the Sports Authority store portfolio in light of the increasing amount of shopping that is occurring online. As a result of these changes in consumer buying patterns, Sports Authority determined that it needs fewer stores as part of its long-term business model."
Sports Authority, which operates more than 450 stores in 41 states, said stores nationwide remain open and continue to operate on normal schedules. Customers also may continue to shop online just as they have in the past. The majority of Sports Authority stores are expected to continue to operate without change or interruption during the entire Chapter 11 process.
A letter from Michael Foss, CEO Sports Authority, posted on the company's Web site, reads, "During the past several months, we have been working very hard to adapt our business to better meet the needs of our customers. We are committed to evolving as a company so we are able to continue to offer the best brands at great values — both in our stores and on our website, SportsAuthority.com.
"With these goals in mind, we have decided to utilize the Chapter 11 process to implement a financial and operational restructuring that we believe is necessary to help us become an even better place for our customers to shop for sporting goods."
According to Foss, "Due to the changing retail environment, we have 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 Web site."
In his letter Foss explains that the closing of 144 locations "was a tough decision to make, but we believe it was a necessary step in our plan to make Sports Authority an even better partner for our customers."
The store closings will occur over the next three months.
Sports Authority in 2011 signed a deal that runs through 2035 for naming rights, valued at $6 million a year, according to industry analysts. The previous naming rights deal was held by Invesco.
Sports Authority said that over the past several months, it has been working with its outside financial advisors to "conduct a strategic review of its business and evaluate options for strengthening the Company’s financial position."
As part of this process, Sports Authority has "pursued a dual track, engaging in discussions with its financial creditors regarding a comprehensive debt restructuring, as well as exploring a recapitalization of the business through a potential sale of some or all of its assets."
“Given our strong brand recognition with a large and growing customer base, valuable business assets and loyal Team Members, we have received strong interest from third parties interested in investing in or buying some or all of Sports Authority,” said Foss.
“We intend to continue evaluating all options to maximize the value of the organization and position us for sustainable success in our industry. As it has been from the beginning of the strategic business review process, our primary objective is doing what is in the best interests of our employees, customers, suppliers and creditors.”
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