Sporting goods retailers continue to fill the bankruptcy court docket, and the impact is being felt across a range of footwear and apparel brands.
After much speculation, Golfsmith International Holdings Inc. filed for Chapter 11 protection on Sept. 14, and the specialty golf retailer plans to close at least 20 stores and find a buyer for its struggling U.S. business.
The firm, which also filed the equivalent of Chapter 11 in a Canadian court for its more than 50 stores there, said overexpansion was mostly to blame for its financial hardships. The Golfsmith chain has 109 stores in the U.S. and said it has already secured a buyer for its Canada business.
In court documents filed in the Delaware Bankruptcy court, the Austin, Texas-based retailer estimated that the value of its assets total between $100 million and $500 million, while its liabilities are also valued at around the same amount.
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While Golfsmith hopes to reduce its U.S. retail footprint and clear out debt in order to find a viable suitor by October, its list of high-profile creditors is a lengthy one.
Behind Callaway Golf’s unsecured claim of $5.5 million, Adidas’ Taylormade Golf Co. Inc. is owed the second largest sum, at $5.1 million. Nike follows at No.3, owed about $3.5 million, and Puma-owned Cobra Puma Golf Inc. has an unsecured claim of $1.8 million.
In addition to the unsecured claims, the brands will have to contend with a loss of business stemming from the company’s store closures and a possible total liquidation should restructuring plans fall through.
In May, athletic brand Under Armour Inc. announced that it would recognize an impairment charge of $23 million during the second quarter of 2016 due to Sports Authority’s bankruptcy and failed restructuring plan. Under Armour had originally planned to bring in $163 million in revenues from Sports Authority in 2016 but said it would only see about $43 million.
Athletes such as Under Armour-sponsored golfer Jordan Spieth have brought some renewed excitement to golf in recent months. But the sport has challenged athletic brands and sporting good firms for the better part of three years, as excitement has dwindled at the same time Tiger Woods’ level of play and activity have diminished.
Golfsmith is the largest dedicated golf retailer in North America.