For sporting goods stores, the clock is running out
Just one major chain flourishing as others fall victim to online
“The marketplace for broad-spectrum sporting goods is very, very limited now. Sporting goods retailers are really in the center of bull’s-eye.” Larry Perkins, CEO, Sierra Constellation Partners
Sporting goods stores are down for the count.
The scourge of insolvency is sweeping through the sector as online sellers gain the upper hand over yet another corner of retail just recently dominated by big-box chains, specialty stores and mom-and-pop shops.
Yet another general sporting goods retailer, MC Sports, filed for bankruptcy in February with plans to liquidate its 68 stores as the fallout accelerates. The demise of MC Sports, based in Grand Rapids, Mich., will eliminate 1,300 jobs in seven Midwestern states. It was at least the 10th bankruptcy of a sports retailer with more than $10 million in liabilities in the past 18 months, according to bankruptcy research source Reorg First Day.
Others have included:
Sports Authority.
The nation’s second-largest sports retail chain liquidated in 2016, closing more than 400 locations.
Golfsmith.
The golf equipment chain filed for bankruptcy protection in September, closing two-thirds of its stores and selling the rest.
Sport Chalet.
The 47store chain based in southern California shut down last year after 57 years.
Eastern Outfitters.
The company that owns discount chain Bob’s Stores and outdoor retailer Eastern Mountain Sports filed for bankruptcy protection in February.
Total Hockey.
The specialty retailer sought bankruptcy protection in July and sold itself to TSG Enterprises, whose brands include Pure Hockey.
Some of the biggest losers have been sporting good chains that offer broad assortments — from canoes to croquet sets. Online sellers are undercutting storebased retailers on price and options and some specialty retailers are luring customers away with upscale items. “The marketplace for broad-spectrum sporting goods is very, very limited now,” said Larry Perkins, CEO of interim management firm Sierra Constellation Partners, whose clients include struggling retailers. “Sporting goods retailers are really in the center of bull’s-eye.”
Amid the ruin, some see opportunity. Dick’s Sporting Goods, the dominant remaining chain, is capitalizing on the fallout. It acquired dozens of stores from its bankrupt competitors, including converting 22 Sports Authority locations into its own stores. Dick’s also purchased Sports Authority’s intellectual property, including its website, which now redirects to Dick’s.
The company recently raised its 2016 profit forecast after third-quarter sales at Dick’s stores open at least a year rose 5.5%.
The retailer, which will report full-year earnings Tuesday, now operates 676 Dick’s stores in 47 states, 74 Golf Galaxy stores in 29 states and 27 Field & Stream stores in 13 states.
“We’re clearly ... one of the big winners in this consolidation,” CEO Ed Stack told investors in October. “We expect ... those market share gains to continue.”
After the demise of Sports Authority left Dick’s as the only national big-box retail sports chain, several analysts drew comparisons to Best Buy’s emergence as the last remaining major national electronics retailer following the 2009 liquidation of Circuit City.
Not counting chains that focus on outdoor wilderness sports like hunting and fishing, the secondlargest general chain is now Modell’s Sporting Goods, which has some 150 stores in the Northeast.
But all of the remaining players, including Dick’s, which did not respond to a request seeking comment, face challenges. For example, the emergence of specialty retailers selling “athleisure” wear, such as Lululemon, present a threat to the bottom line.
Meanwhile, contraction in the popularity of golf has undermined sporting goods chains that once relied on a steady clip of sales of golf balls, shoes and clubs.
To some extent, the sector’s problems mirror the broader retail industry’s troubles. About 14% of retailers tracked by Moody’s Investors Service qualified as “distressed” in February, reaching the highest point since the Great Recession.