Sports Authority told Reuters, an international news agency in London, on Friday that it would miss another key debt interest payment. They’re facing fierce competition from retailer giants, Wal-Mart and Amazon.com, which is really hurting their profits. However, they have sufficient liquidity to pay back the mezzanine debt but the senior lenders elected to not make the payment and continue discussions about their competition. There is speculation that the missed $20 million payment could lead to the first major bankruptcy of 2016. Sports Authority has struggled with its operating performance over the past four plus years and have been struggling to cope with adverse weather and poor management. They are estimated to have $1 billon dollars in debt but are working on operational improvement plans including store re-modeling, improving product stock levels, and e-commerce initiatives. Credit agencies warned that if those initiatives are not successful, Sports Authority could have trouble refinancing its capital structure.
Link: http://fortune.com/2016/01/17/sports-authority-debt-payment/
Interesting... I was a fan of Sports Authority, shame to hear that it might become bankrupt. It's crazy that they still made 2.7 billion in 12 months, but it sounds like that does not help too much when it comes to recovering from their debt. Dicks Sporting Goods has become a big go-to store with sports apparel, so maybe they have stolen a lot of customers which helped run Sports Authority out of business?
ReplyDeleteThis is very interesting. Being an athlete since elementary, I would not say that sports authority has been at the forefront of places where I would shop for the latest gear. I agree with Brad that Dicks Sporting Goods could have definitely stolen customers from Sports Authority and that was something they were unable to compete with. I think Sports Authority is also at a disadvantage because malls often have footlockers, Nike, Adidas and other top brand name stores that carry much of the merchandise available within these brands. If you are a fan of one of these brands then it is simpler to go to the mall and visit that specific store or to visit more than one brand in a single place. I am not sure that Sports Authority will be able to compete with these other stores in the future if they do not change their business model, advertising, as well as their location choices.
ReplyDeleteYeah, both above comments make sense to me and could be a contributing factor as to why Sports Authority is struggling. An interesting, bigger issue is how people buy goods nowadays and how ordering something off amazon may replace the need to go into a brick and mortar location. I can see how some sporting goods one would need to be able to try things on in order to know if it was adequate for them to wear. But many sporting goods do not need to be bought in person to assure the consumer of its quality. Things like water bottles, pumps, balls, athletic tape etc. I wonder if as consumers we ought to take responsibly for some of our decisions. Do we want to eliminate brick and mortar places because its more convenient for us to shop that way? Or would buying from these type of stores prevent big companies like amazon from controlling the market even if it means a little more time spent shopping.
ReplyDeleteSimilar to what Walmart is attempting to do, Sports Authority should really be focusing on the E-commerce aspect of their business. Nowadays, most people will stop in to the store to try on/feel the physical product and then return home to buy the product at the cheapest online venue. If this is the case, then Sports Authority will continue to struggle as they don't offer many services unique to them which will set them apart from sportswear giants such as Dick's Sporting Goods or niche stores such as Footlocker or Champs Sports. Sports Authority has a steep uphill climb if they are to continue to survive.
ReplyDeleteSports Authority is just one of the many storefront companies beginning to fail in the age of technology. It would be interesting to see how a more intensive internet marketing program would effect the company.
ReplyDeleteSports Authority is just one of the many storefront companies beginning to fail in the age of technology. It would be interesting to see how a more intensive internet marketing program would effect the company.
ReplyDeleteAccording to analysis conducted by Bloomberg & Moody's Investors Service Inc. Sports Authority has at least $643 million in debt, including a newly extended $343 million in subordinated notes maturing in 2018. What's unclear is how much is drawn under the line. Looking at these various numbers that tell a dire tail of Sports Authority's flawed business model, one would interject that a major remodeling of how they conduct business needs to take place if Sports Authority is to survive beyond its deadline to refinance $300 million of its term loan before it becomes current in May.
ReplyDeleteSports Authority is in a market with a lot of competition. I am not a personal user of the company, but I know of other companies that lead the market. Sports Authority needs to find ways to gain an advantage over its competitors. The company could update its online experience, or remodel its store front. The problem is that they are already in debt and cannot afford to spent much more money.
ReplyDeleteI found this quite interesting, back home in Atlanta we have a sports authority as well as a Dicks Sporting Goods, and the sports authority gets many more customers. The reason for this is there employees seem to have more knowledge of the products.
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