Sports Authority files for bankruptcy, owes Nike and Under Armour millions
Troubled sports retailer, Sports Authority, filed for Chapter 11 bankruptcy in Delaware Tuesday and intends to close 140 stores. It emerged that the company, owned by Los Angeles-based private equity firm Leonard Green & Partners and headquartered in Englewood, Colorado, outside of Denver, owes Nike, Inc. $47.9m and Under Armour $23.2m. The company currently operates 463 stores with around 13,000 employees in 40 US states and Puerto Rico.
The company had a difficult time coping with losing market share to online retailers, became saddled with $1.1bn in debt and was unable to keep up with evolving consumer trends.
“We are taking this action so that we can continue to adapt our business to meet the changing dynamics in the retail industry,” Sports Authority CEO Michael E. Foss said in a statement. “We intend to use the Chapter 11 process to streamline and strengthen our business both operationally and financially so that we have the financial flexibility to continue to make necessary investments in our operations.”
Leonard Green & Partners acquired the company in 2006 for $1.3b. Sports Authority posted a net loss of $156.6m in the fiscal year that ended January 30th. Liquidation sales at stores will begin on Friday if approved by a bankruptcy judge, according to a court filing by Sports Authority chief financial officer Jeremy Aguilar. The company has secured $595m in bankruptcy financing that will keep the stores open for the time being.
It is unclear if Sports Authority will sell off the brand name, one of its most important assets, to a competitor or online retailer.
Source: USA Today/KGW