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Sports Authority Moves Toward Bankruptcy

Sports Authority Moves Toward Bankruptcy

Online sales are hurting big box retailers in just about every demographic. Sports equipment retailers are no exception. It’s tough for stores to move the inventory, especially the selective, higher-priced stuff you typically find in a sports apparel store and still compete with the internet. Just ask Sports Authority. The company recently filed bankruptcy as it attempts to figure out a way to manage its debts, especially a large sum owed, in about a week.

Once the biggest sporting-goods chain in the country, Sports Authority is now attempting to move into Chapter 11 bankruptcy. Tangentially, the company is also planning to close nearly half of its 450 stores.

The payment in questions runs about $20 million, for interest on about $343 million of debt. Some in the media report the company already skipped last month’s payment. That number represents only about half of Sports Authority’s total debt, which has stacked up as it attempts to keep stride with Dick’s Sporting Goods and, of course, Amazon.

The bigger question, though, is less immediate. Even if Sports Authority manages to make it into bankruptcy and reshuffle its debt deck, the company still has to find a way to become more competitive. Shuttering 200 plus stores is not going to be good enough. In nearly every market, the company faces direct competition from both big box sports stores, standard retailers, and specialty shops with limits by specific product lines, everything from yoga pants to bike or tennis shops.

Then, of course, there’s Amazon. It’s the elephant in every room where nervous boards discuss how to keep profits from plummeting as more consumers shop online first – or always.

Selection alone is not enough. Customers may want to be loyal, but many of the larger stores, Sports Authority included, took their market base for granted for far too long. Customer service and selection both slipped, turning them less into a destination and more into a “maybe I’ll check there.”

Those shoppers are mostly starting online now, and only going to larger stores as a second option.

If Sports Authority wants to turn this around, they need to make a strong PR push toward customer service, specialization, and connection, making their stores once again a prime destination for athletes.

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