Sporting goods retailer Modell's files for bankruptcy
Modell’s Sporting Goods Inc. sought court protection from its creditors and plans to close all its stores, unable to keep up with larger rivals and web competition. Retailers are struggling to keep up with changing consumer habits, as peope shop more online, forcing several companies to close stores.
The family-owned retail chain’s Chapter 11 bankruptcy petition was filed in New Jersey. The chain will begin liquidation sales of sporting goods in all stores and plans to continue its online sales during the process.
Fourth-generation owner Mitchell Modell had tried to line up support with its stakeholders to keep the chain out of court, including vendors and lenders, but ultimately fell short. The company decided that if it was unable to find a buyer by 12:30 p.m. Tuesday, it would file bankruptcy and begin liquidating, Modell’s said in court papers.
“While we achieved some success, in partnership with our landlords and vendors, it was not enough to avoid a bankruptcy filing amid an extremely challenging environment for retailers,” Modell said in prepared remarks.
Modell’s partnered with Tiger Capital Group LLC to liquidate the remaining stores beginning Friday, March 13. The sporting-goods empire operates 153 stores in New York, New Jersey, Pennsylvania, Connecticut, Rhode Island, Massachusetts, New Hampshire, Delaware, Maryland, Virginia and Washington D.C.
Sports merchandisers have experienced the pain of the retail upheaval that’s led to a wave of bankruptcies and a record number of store closings. The most prominent was Sports Authority, which filed for court protection four years ago. Modell’s was one of the unsuccessful bidders for parts of that chain.
Modell’s said in a statement it has been talking with its creditors about a recapitalization of the business through a potential sale of some or all of its assets or an equity investment, and that it will continue to pursue those discussions.
For Modell’s, America’s oldest family-owned sporting-goods retailer, trouble deepened in January after a disappointing holiday season pinched cash flow.
In an earlier interview with Bloomberg, Modell, 65, blamed warm weather, which translated to fewer outerwear sales, poor showings by professional teams like the Jets and Giants, which crimped merchandise demand, as well as competition from big-box stores like Walmart Inc. and Amazon.com Inc.
The case is Modell’s Sporting Goods, Inc., 20-14179, U.S. Bankruptcy Court for the District of New Jersey.