Sports Authority Closing
Sports Authority has hit the end of the road. After trying, desperately, to save its brand through filing Chapter 11 bankruptcy last March, the company has announced it will take steps to liquidate its physical and intellectual assets in a last-ditch attempt to appease its creditors before (most likely) disappearing off into the sunset.
Although it had hoped that its plan to close 140 of its 463 stores would give it the time and capital that it needed to reorganize and survive in an increasingly tough retail space, last week they announced that those plans had fallen through. A lawyer speaking on behalf of the company explained,
We will not be able to reorganize under a plan, but will instead pursue a sale
This means that Sports Authority’s name and assets are set for a court-supervised auction on May 16th. While the company has not officially announced its plans for the remaining stores bearing its name, many industry insiders believe that competitors such as Dick’s Sporting Goods and Model’s may be interested in purchasing some of those buildings. Unfortunately, at this time, no person or corporation has expressed interest in buying the brand in its entirety, however.
What Went Wrong for Sports Authority
The story of Sports Authority’s demise is really a thesis on the changing face of the retail sector over the past two decades. Though it may be hard to believe now, just 10 years ago, Sports Authority was as big and as successful as Dick’s, boasting $3 billion in annual sales in 2006. However, amid the rise of eCommerce, Sports Authority took some wrong turns. It didn’t invest early enough in online platforms and failed to segment from competitors in its brick-and-mortar stores. Dick’s, on the other hand, invested heavily on improving customers’ in-store experience including a focus on technology in its stores. And even Dick’s is feeling the pull of the eCommerce train, with sales down 2.5% over the holiday season. Given this climate, its no wonder that Sports Authority, already operating at a $1.1 billion deficit, could not keep up.
As the liquidation of its assets takes place over the next few weeks, the future of Sports Authority is still a bit uncertain, though. Although liquidation almost always signals the end of a brand, there are a few recent case studies, such as Sharper Image and Linens N Things, which show that a brand can survive with a successful online-only relaunch. There’s also the example of Radio Shack which persevered by cutting itself down to bare bones. And while this may not be much, for Sports Authority’s loyal customers, it’s something to cling to…for now.