Sports Authority opts for liquidation after declaring bankruptcy
(AP Photo/Richard Drew)
A Sports Authority store in New York. The company is filing for Chapter 11 bankruptcy protection. The Englewood, Colorado, company has 463 stores in 41 states and Puerto Rico.
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After declaring bankruptcy in early March, athletic apparel and gear chain Sports Authority will liquidate its assets, reports The Los Angeles Times.
The company was originally considering a reorganization plan to keep the brand alive, but will instead auction it off, potentially in pieces. Rumors were circulating for the past few months that the retailer was at high risk of defaulting on a $300 million loan that is due in May 2017.
The retailer was also failing to perform in the face of fierce competition. Sports Authority annual revenues hover around $2.7 billion, which is roughly the same as it was in 2006. After filing for Chapter 11 bankruptcy last month, competitors like Dick's Sporting Goods and Modell's showed interest in picking up some of Sports Authority's store locations and intellectual property.
This news comes at a time when sports apparel is growing in popularity thanks to "athleisure" — a fashion trend in which people wear athletic clothes outside of a gym setting, like at the office or while shopping. As a result, long-standing athletic brands and retailers are struggling to reach consumers who are increasingly turning to the web to make their fashionable purchases.
We believe that this burst of competition is starting to shake up the industry, making room for new players that are more equipped to reach today's e-commerce consumers. Other athletic-gear retailers like Finish Line and Lululemon have been struggling to maintain market share and relevance.
Meanwhile, familiar names like Nike, Dick's Sporting Goods, and New Balance have all continued to thrive by heavily focusing on e-commerce and providing omnichannel services. E-commerce has also helped fuel the success of some online-only retailers like Fabletics and Tracksmith.
The athleisure trend is causing a stir in the market, and more retailers are going to be adversely affected by it. Brands and retailers that already specialize in one type of inventory should consider supplementing sales with workout apparel to take advantage of this trend.
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