Sports Authority is in talks with lenders including TPG Capital Management LP to file for Chapter 11 bankruptcy and further reorganize the company, according to a Bloomberg report.
The reorganization would close as many as 200 of the retailer’s more than 450 store locations. The retailer has at least $643 million in debt, the report said.
Sports Authority reportedly skipped a $20 million interest payment in January on a $343 million loan from its creditors. The payment is due Feb. 14, 2016.
The potential diminishment of Sports Authority comes as more athleticwear brands, such as Nike and Under Armour, have emphasized their direct-to-consumer sales businesses, and rival DICK’S Sporting Goods continues to experience strong growth in store openings and a 7.6% annual increase in sales.
Furthermore, retailers such as lululemon, Gap’s Athleta brand and even Amazon have cut into the athleticwear market that Sports Authority once dominated. Apparel that was previously exclusive to athletes is now finding homes in retailers well outside the sporting goods vertical.
Moving forward, Sports Authority may have to reconsider its number of store locations but also further align these brick-and-mortar environments with its product offerings. With consumers continuing to demand more of an experience in stores, Sports Authority has a tremendous opportunity to turn store areas into places where shoppers can try out the products.