MC Sports is the latest sporting goods retailer to bow out of the game with a move into bankruptcy protection and a plan to liquidate all of its stores.
The Michigan-based sporting goods and apparel retailer, which operates a chain of 68 stores throughout the Midwest, filed for Chapter 11 protection on Tuesday evening, listing $50 million to $100 million in liabilities and the same estimated range of assets.
MC Sports said over the last four years “in order to remain competitive” it made “substantial investments” in its store portfolio, including remodeling and opening new locations, but hasn’t been able to keep up with the growth of online sales, encroaching specialty retailers and increasing distribution channels, despite annual revenues exceeding $170 million.
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Last fall, MC Sports retained business consultant firm Berkeley Research Group in an effort to turn things around, but weak Black Friday and holiday sales “further impaired” the company’s liquidity.
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The company also attempted to negotiate with vendors, landlords and other creditors for financial concessions, but was unable to come to terms on an out-of-court restructuring.
“Having decided that a restructuring plan is not feasible, [MC Sports] — in consultation with BRG — determined it was in debtor and its creditors’ best interest to proceed with an orderly liquidation of its 68 stores,” the company said in a court filing.
Tiger Capital Group LLC and Great American Group LLC will oversee the retailer’s liquidation and store closing sales, which began Tuesday and are set to be complete by April 30.
While proceeds from the store closing sales will fund the bankruptcy process, a portion should also go toward the retailer’s creditors, of which there are many.
The largest two are Nike and Under Armour, which are owed $3.8 million and $2.5 million, respectively.
Last year, Under Armour had to dim its 2016 financial outlook after Sports Authority Inc. filed for bankruptcy and subsequently decided to liquidate. While MC Sports is not as large, another sporting goods bankruptcy is no doubt an unwelcome development for the brand, since it’s already dealing with slowing growth and its very own President Trump controversy.
Another sports retailer, Eastern Mountain Sports, entered bankruptcy earlier this month through the Chapter 11 filing of its parent Eastern Outfitters.
Other sports and activewear bankruptcies over the last few months include Yoga Smoga Inc., a high-end yoga apparel brand, and Golfsmith International Holdings Inc., one of North America’s largest specialty retailers of golf equipment, apparel and accessories.