For sports retailers, spring is a great time to be in business. Many high school and outside organizations are gearing up for baseball season. Also, as the weather improves in colder regions of the country, many parents are buying new bicycles, helmets and pads for kids learning to ride bikes. Even golfers are coming out from their winter hiatus; which means that new gear and clubs will likely be purchased.
Also, this time of year brings out stiff competition between sporting goods retailers. And as we have noted in prior posts, some retailers may not survive the busiest season for profitability. Such may be the case with The Sports Authority.
According to a Reuters News report, the Colorado based retailer could seek Chapter 11 bankruptcy protection as early as next week. The move could expedite the closing of as many as 140 stores across the country. The Sports Authority currently has 450 stores in the United States.
It is reported that the company failed to make a $20 million interest payment on a $343 million loan that matures in 2018. It also laid off 100 people at its corporate offices. As we have noted in prior posts, retailers do not do particularly well in Chapter 11 bankruptcies. However, the Quiksilver resurgence may spark a different, positive trend for retailers seeking bankruptcy protection.
It remains to be seen how Sport Authority’s debt will be restructured and what will become of all the stores scheduled to be closed. Regardless, it is another example of how a troubled retailer can benefit from experienced legal counsel.