National retailer Sports Authority, once touted as one of Mitt Romney’s Bain Capital “successes,” is announcing the closure of 140 stores, about a third of its outlets.
The national chain was founded in 1987 with the investment help of Bain Capital and by the late 2000s had become one of the nation’s largest sports retail outlets, even spreading to Japan. The company was seemingly so successful that in 2012 it was called one of Mitt Romney’s biggest business successes.
Romney is credited with turning a $600,000 investment into a stake worth eight times the initial infusion.
But now, CEO Michael Foss announced that Sports Authority has filed for Chapter 11 bankruptcy and will close 140 stores to help close the gap of a missed $20 million debt payment.
The company said it also plans to close two distribution centers, one in Denver and the second in Chicago. Sports Authority has 14,500 full and part-time employees and currently operates 463 stores in 41 states and Puerto Rico. The closings may to take up to three months to complete.
“We are taking this action so that we can continue to adapt our business to meet the changing dynamics in the retail industry,” Foss said in a statement on Tuesday.
On its website, Sports Authority said it plans to retool stores, cut staff, and upgrade its website to better cater to the growth in online shopping.
Foss also noted there is an as yet unnamed third party that has expressed interest in investing in the company to help it come back from its massive debt.
In January the company had already cut 100 jobs mostly at its Englewood, Colorado headquarters. The new job cuts will affect perhaps as many as 4,000 employees.
But with liabilities of upwards to one billion dollars, the company may need to take more action.
For one, Andrew Bove, credit analyst with Standard & Poors, thought the announcement didn’t go far enough . Bove told CNN, “In terms of their long-term viability, I think they need to do more than just close stores. There’s other issues. They’re not doing enough to get consumers in the door to spend money.”
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