It has been an interesting ride for Sports Authority since it was acquired in 2006 by private equity firm Leonard Green & Partners for $1.3 billion. As the realities of the retail sector fluctuate, bricks-and-mortar legacy chains such as Sports Authority have the choice of adapting or dying off.
Today, there are reports that the company is considering selling stores and assets to Dick's Sporting Goods (DKS), as it appears to be on the brink of filing for bankruptcy protection, according to a Reuters report.
Sports Authority has long been the main rival to Dick's. The year before the company was taken private, Sports Authority's annual revenue of $2.5 billion nearly matched Dick's $2.6 billion revenue.
However, since that time, Dick's has far surpassed Sports Authority in the athletic retail space, nearly tripling its annual revenue to $6.8 billion, while Sports Authority sales have remained relatively flat at $2.7 billion, according to CNBC.
The company missed a $20 million coupon payment on Jan. 15, which triggered a 30-day grace period for the company to work finances out with its creditors. In the meantime, Sports Authority plans on closing between 150 and 200 of its 450 stores nationwide. Last month, Sterne Agee published a note stating that 23% of Dick's 600 locations are within the immediate vicinity of Sports Authority locations.
Sports Authority isn't the only retailer closing stores amid stormy retail seas in 2016, however.
Last month in a letter addressed to shareholders, Edward Lampert, Chairman of struggling retailer Sears Holdings (SHLD), said, "2015 has proven to be the year where the impact of the changes I have described to you in the past, has spread more broadly to retailers that had previously proven to be relatively immune to such shifts. Walmart, Nordstrom, Macy's, Staples, Whole Foods and many others have felt the impact of disruptive changes from online competition and new business models."
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Sears is one of at least 13 retailers that have announced plans to close stores in 2016 amid shifting realities in the retail market.
Macy's (M) announced that it would close 36 stores and lay off about 2,500 employees. J.C. Penney (JCP) said that it will close another 47 stores this year after shuttering 40 in 2015. Wal-Mart (WMT) will close 154 stores in the U.S. and 269 worldwide. Sears said that it will close at least 50 "unprofitable stores" by the end of this year.
"In the retail sector alone, we have seen a variety of responses to these tectonic shifts. Some of them include mergers, joint ventures structured as acquisitions, market exits, sale of companies, bankruptcies, in-store partnerships and leasing and geographic expansion," Lampert wrote. "Each of these alternatives carries opportunities and risks, but collectively they signal how large the impact and pace of change has been, with no signs that it will abate any time soon. They also highlight how the skill sets of the leadership of retail companies need to evolve to include more sophistication around technology, business models and adaptability."