Sports Authority Inc. filed for chapter 11 bankruptcy protection on Wednesday as the big-box chain missed the fitness boom and fail to shift to online shopping.
The retailer said it would seek to sell or close 140 stores in the coming weeks. The company now is operating about 450 stores in U.S., so it will sell nearly one-third of its locations. The retailer also planed to sell two of its distribution centers in Denver and Chicago. The company said it expects most stores to continue in operation throughout the chapter 11 process.
The company also said that it planed to save $124 million in tax when it tried to sell the assets. It means that they may seek a special court order that might allow it to sell assets without triggering a tax law.
“These tax savings could substantially enhance the Debtors’ cash position for the benefit of parties in interest,” the company said in court papers.
Sports Authority has been struggling to compete with its rivals includes big-box retailers Wal-Mart Stores Inc., Target and Dick’s Sporting Goods Inc. In 2006, Sports Authority and Dick’s were the same level companies. But now Dick’s has about 200 more stores than Sports Authority and became the leader in selling athletic gear.
“We are taking this action so that we can continue to adapt our business to meet the changing dynamics in the retail industry,” said Michael E. Foss, chief executive officer of Sports Authority. “We intend to use the Chapter 11 process to streamline and strengthen our business both operationally and financially so that we have the financial flexibility to continue to make necessary investments in our operations.”