Sports Authority’s Demise Shakes Faith In Consignment Deals

Sports Authority Inc. limped into bankruptcy in March with a straightforward plan to survive as a smaller, more nimble purveyor of bats, balls, sneakers and sweatpants. Job One? Close unprofitable stores and sell off their inventory. But almost immediately a fight broke out over who owned some of that inventory: The retailer or the vendors who supplied it on consignment? Employees had to pull more than $25 million in stock from liquidation sales while the company and the suppliers bickered about how deeply to slash prices and who got the money. The slimming-down process was abandoned. Now Sports Authority, which once boasted almost 500 stores and 14,500 employees, is shutting down entirely. The meltdown had many causes, but the consignment conflict was a crucial blow and raised an issue many hadn’t thought existed. It’s making vendors and lenders more cautious as the crucial holiday ordering season dawns, with some suppliers looking into the best ways to secure their interests before a retailer goes bankrupt. Read more at Bloomberg.