It has been looming for a while, but it has been officially announced that Sports Authority has filed for bankruptcy while in the meantime it is also going to be closing 140 of its stores. That is about a third of its entire chain of stores.
Back in January, pundits and analysts alike were predicting that the company was going to go bankrupt when it was revealed it had missed a debt repayment amounting to $20 million.
The closing of the stores will be staggered across a three month period and the exact location of all the stores that will be closed has not yet been told to the general public or workers at some of these places. Sports Authority employs 14,500 both full and part time employees and had over 450 stores spread throughout the country. Around two thirds of employees are reported as being part time employees. It has over $1 billion in liabilities and assets.
Is There Long Term Stability?
In order for them to stay a viable and functioning company there has to be more to be done than just closing stores. They have a hard time with customer retention. After the announcement they have said that they will borrow some $595 million in order to fund themselves while going through bankruptcy. In order to get out of this new loan on top of bankruptcy, the only logical answer to this is to find a buyer for the stores.
Sports Authority is one of the well known names in the industry and could still be a viable business, but has been overtaken by companies like Dick’s Sporting Goods who didn’t have the same problems with a large debt load. Going to Dick’s Sporting Goods offers a more luxurious shopping feel and Sports Authority pales in comparison to the experience that their main competitor offers.
Part of a Larger Implication
The problem with Sports Authority is an overreaching new phenomenon in the realm of brick and mortar stores. Ever since the advent and convenience of online shopping began to take hold, there’s just not much of a reason to go into the physical location. Any arguments that once held weight as to why the physical experience was better are quickly becoming obsolete due to technological advances being made everyday and only getting larger because of exponential growth.
It’s simple to look at the precedent that is being set. It was in 2008 this first began when Circuit City went bankrupt and disappeared, soon followed by Borders in 2011. Any physical store still standing has done so because it offers something else, which who knows can be that sustainable now in the digital age. Even major store chains like Wal-Mart are falling off and its one of the largest retail businesses out there. This could very well be the start of the new trend of forcing weak retail stores out of business and culling everything and anything in between. This is just the beginning.