Athletic Retailer City Sports Files for Bankruptcy
October 05 2015 - 11:50AM
Dow Jones News
Boston-based athletic gear retailer City Sports Inc. filed for
chapter 11 bankruptcy Monday in order to liquidate at least a
quarter of its stores.
City Sports said it has a deal with liquidators Tiger Capital
Group to hold going-out-of-business sales at eight of the company's
26 stores, which are scattered throughout the Northeast from
Massachusetts to Washington, D.C. For the remaining 18 stores, City
Sports is working to locate a buyer during its bankruptcy case that
would either continue operating the stores or liquidate them, the
company said in court documents.
In recent days, City Sports said several potential purchasers
have expressed interest in continuing operations at those stores.
To capitalize on that interest, and because the stores will be
forced to liquidate if no sale occurs by Oct. 30, City Sports has
requested that the U.S. Bankruptcy Court in Wilmington, Del.,
consider its auction proposal by Oct. 19.
The company, which is 83% owned by funds affiliated with
Highland Capital Partners, said that record-setting weather on the
East Coast has harmed sales of certain of its products, which were
already struggling to compete in the athletic sector crowded by
giants like Sports Authority and Dick's Sporting Goods Inc., big
box retailers like Wal-Mart Stores Inc. and Target Corp. and new
entrants like Lululemon Athletica Inc.
By April 2014 it was clear that City Sports would have to make
changes in order to stay afloat, so it hired financial advisers at
FTI Consulting Inc. to help it reduce costs. Store hours were cut,
the labor force reduced and freight deliveries slowed, the company
said. But one big issue that plagues so many distressed retailers
couldn't be fixed—store leases. Negotiations with landlords didn't
yield the kind of cost reductions that City Sports said it needed
to stay solvent, so it entered bankruptcy.
City Sports was founded in 1983 and sells athletic apparel and
equipment from the likes of Nike and Asics, in addition to its own
line called CS by City Sports.
The chain employs 816 people and entered bankruptcy claiming
$38.6 million in assets and $39.6 million in liabilities. In
bankruptcy, City Sports has requested permission to continue paying
wages and benefits to its employees—a standard request in chapter
11—and to continue honoring customer gift cards and exchanges.
Write to Stephanie Gleason at stephanie.gleason@wsj.com
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(END) Dow Jones Newswires
October 05, 2015 11:35 ET (15:35 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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