Earlier today I read a few stories that indicated Sports Authority might be changing up its game plan in bankruptcy. The original plan when the retail chain initially filed for Chapter 11 in March was they were going to close about 150 stores including a few in the Chicago area but remain open as a company.
But according to the reports last night and this morning like this story among others, all 450 stores were going to close. I was disappointed since there were two stores each with a 5 minute drive for me. Then again, that was part of the problem.
Anyway, my first thought when I read this was to head over to one of my local Sports Authority stores before the masses did to try to grab some steeply discounted gear. I have one kid in youth sports, basketball by winter, baseball by spring and fall, and another one about to be.
After school I grabbed the kids and my growing gear list and drove over. When we got there, the store didn’t look any different. There were no store closing signs, nothing indicating all inventory must go, no one waving those larger than life signs outside on the road, risking life and limb just to inform drivers of an ongoing Going Out of Business Sale.
Once we got inside there were no fewer than three smiling clerks at the front of an otherwise empty store welcoming me to Sports Authority asking me what I was looking for today. Again, that also might be part of the problem. Anyway, they looked like they had just come from their high school’s pep rally so I didn’t want to rain on their parade by asking them how much time I had before the store closed for good, before they lost their jobs.
However, the woman behind me was a bit more blunt. When the clerks asked her the same question, she said she was looking to spend some gift cards before the store went out of business.
“This store is not closing,” the clerk told her.
“No, the plan has changed. Last night I read that now all the stores are closing. I guess your manager didn’t tell you yet, ” she responded.
The clerk shot back, “Our manager told us today that story from last night was wrong. The company is trying to get the story changed but it got out. We’re staying open. The Lombard store is closing though.” That is a store on the original closure list from March.
So much for stocking up on practice balls and gym shoes.
Still I was curious since I had read the same story as the woman behind me. When I got home I went right to the Sports Authority website but didn’t see a company statement or anything to that effect directly from the company.
Then I started digging around at the stories again and noticed something interesting. Most were originally published yesterday but were updated this afternoon. I know updates are quite common but these updates were consistent. The ones that weren’t updated still carried the original all stores are closing story.
Buried at the bottom of the Forbes story was this:
“Correction: A previous version of this article incorrectly stated that it had already been decided that all the chain’s locations will be closed.”
While I won’t bore you with details of bankruptcy law, according to this instead of reorganizing and operating through bankruptcy Sports Authority was not able to get approval from the creditors who hold the $1.1 billion of outstanding debt the company has. Instead, they are going to liquidate, or try to sell their assets.
This may or may not mean all the stores are going to close. Depending on who the buyer is, some of the remaining stores may stay open or be rebranded and folded in to the acquirer’s company.
Of course, one very realistic outcome is the closure of all the stores if there is no buyer for the assets, similar to what has happened to large retail chains in the past. There are several recent precedents here and Borders and Circuit City certainly come to mind. So I wouldn’t exactly encourage your high school or college student to apply for a summer job at that store I visited today with the “Now Hiring” sign.
We just don’t know yet if all the stores are going to close. Liquidation and asset sale are not necessarily synonymous with closing every single store.
I’m just glad I actually talked to some people at the store instead of relying on the internet. That’s actually good advice for most things in life other than figuring out if my Sports Authority store is going to close but I digress.
Unlike the value of Sports Authority debt, at least my trip into the store wasn’t a total loss. Maybe today I didn’t find any store closing deals, but I did score two camping chairs for $7.99 each which are sorely needed for my son’s baseball games. That is a great deal on its own. I may be back later for those deals though. Only time and the outcome of the liquidation process will tell.
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