Sports Authority May File for Bankruptcy

Sports Authority logo

Englewood, Colorado-based retailer Sports Authority may file for Chapter 11 bankruptcy within the next month or so, according to recent reports from Reuters and Bloomberg Business. The retailer, which operates more than 450 stores throughout the United States and Puerto Rico, missed a Jan. 15 payment and failed to resolve the issue with its creditors within a 30-day grace period that ended Feb. 14. As a result, Moody’s Investors Service downgraded the company’s credit rating last week. A press release from Moody’s revealed that “Sports Authority’s capital structure is unsustainable over the longer term, and the risk of a default, including a distressed exchange, is high given the upcoming maturities.”

Sports Authority has struggled against serious competition from other major sporting goods retailers, such as Walmart and Dick’s Sporting Goods (the largest chain in the industry with $6.8 billion in revenue in 2015), as well as from newer market entrants like Lululemon and even Amazon. The potential bankruptcy filing would reportedly allow the retailer to close many of its underperforming stores and restructure its operations in an effort to deal with its estimated $643 million in debt.

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