Retailer Perishes Under Weight Of Online And Discounter Competition
RETAIL NEWS
Modell’s Sporting Goods has filed for Chapter 11 bankruptcy protection and will be closing its remaining 115 stores, including its Rockland County location at Rockland Plaza in Nanuet and in the Palisades Center.
Both Rockland Plaza and the Palisades Center have been affected by a string of bankruptcies and closures. While a new structure is rising at Rockland Plaza to house a Shake Shack and Chipotle, the center has lost Charlotte Russe, Payless and Destination Maternity within the past year, and several big boxes have closed at the Palisades Center, along with the shuttering of Lord & Taylor.
The century-old family-owned sporting goods chain, which has been trying to renegotiate leases and talking to potential investors in a last-ditch effort to save the company, and 13 affiliated firms filed a voluntary petition Wednesday in U.S. Bankruptcy Court for the District of New Jersey in Newark. Modell’s, which is about 130 years old, has 153 stores across the U.S. Northeast. It bills itself as the nation’s oldest family-owned sporting-goods retailer.
Modell said that if the company filed for bankruptcy protection in March, its landlords would end up being out two years of rent. The chain lost $50 million last year, according to Fox Business.
In its filing, Modell’s said it has between one and 49 creditors, $500,000 to $1 million in assets, and $1 million to $10 million in liabilities. Its top unsecured creditors are Adidas, owed $9 million; Nike, owed $8.7 million; and Under Armour, owed $3.8 million.
“This is certainly not the outcome I wanted,” Modell’s CEO Mitchell Modell said in a statement, but added it will mean “the greatest recovery for our creditors.”
Modell’s also said it had retained Berkeley Research Group as a restructuring adviser.
A Modell’s spokeswoman said that as of Wednesday the company had 3,623 employees.
In a last gasp effort, Modell launched a public campaign to try to save the sports-goods chain after its financial woes worsened last year. Last month Modell appeared several times on the cable TV channel Fox Business to solicit financial support for his company, saying he was willing to sell a stake in it to an outside investor.
The CEO, who had announced plans to close 24 stores, in February said as a result of talks with landlords over leases he would only have to shutter 19 locations. Most recently, published reports said Modell’s was looking for a stalking horse bidder for the company.
The company also said it is discussing a possible recapitalization of the business via a sale of some or all of its assets or an equity investment, and will pursue those talks.
Modell’s, like other brick-and-mortar retailers, has faced heightened competition from online retailers and big-box stores. About four years ago, Sports Authority filed for bankruptcy and met its end. An unusually warm winter has not helped Modell’s.
“Over the past year, we evaluated several options to restructure our business to allow us to maintain our current operations,” Modell said. “While we achieved some success, in partnership with our landlords and vendors, it was not enough to avoid a bankruptcy filing amid an extremely challenging environment for retailers.”
The New York-based retailer known to New Yorkers for its “Gotta Go to Mo’s” advertising slogan, said Wednesday it will start liquidation sales at the remaining stores Friday morning. It will team up with Tiger Capital Group to oversee the going-out-business sales. Tiger had helped the company liquidate 19 stores prior to the filing.
Founded in 1889 by Morris A. Modell, the first Modell’s store was located on Cortlandt Street in lower Manhattan, according to the company website. The chain, which is being run by the fourth generation of the Modell family, developed the business into a chain of over 150 stores throughout the Northeast.