So far 2016 hasn’t been a good year for Sports Authority, and by the looks of things this year could be among the near 90-year-old retailer’s last.
First, the company cut 100 employees—mostly from its corporate headquarters—in January. Then rumors started circulating that the Colorado-based sporting goods chain was prepping to file for Chapter 11 reorganization and the outlook for stores was bleak.
Sports Authority also elected to miss a $20 million interest payment on its $343 million of subordinated debt and the 30-day grace period before default was up on Feb. 14. The retailer could be swimming in as much as $643 million in total debt, according to estimates.
Citing a source familiar with Sports Authority’s plans, the Denver Post said the company has plans to shutter roughly 140 of its 450 stores.
A handful of closures have been planned in the company’s Colorado home base, while some stores, like the Boulder S.A. Elite store, have already posted 75 percent off liquidation sales, according to the Post. Sports Authority will also close its Denver flagship, the Sports Castle. Sales at the store have begun and it will soon turn into a liquidation center for remaining inventory from other soon-to-be closed Denver stores. Employees in Texas were alerted that all of the state’s 25 Sports Authority stores would close, but weren’t given any closing dates.
Moody’s Investor Service downgraded Sports Authority’s probability of default rating Tuesday over the missed interest payment, changing the company’s rating to Ca-PD/LD from Caa3-PD, which essentially means Sport Authority is in limited default on some (in this case one) of its debt obligations, but not all of them.
Yet, that is.
The ratings agency did say the outlook for Sports Authority “remains negative” and that its rating “reflects the high probability that the missed interest payment on its senior subordinated notes will lead to a second default from either an acceleration of the $300 million senior secured term loan due to the cross default provisions, a bankruptcy filing, or a debt restructuring.”