Sports Authority accelerates store closings, could be gone by end of July – The Denver Post

Sports Authority is scrambling to close the doors on most or all of its stores by the end of the month, according to multiple store employees and managers, an abrupt move that comes amid a fight over cash between lenders and suppliers.

Managers have been instructed on procedures for wiping the computers, locking up and walking away, as the dying athletic gear seller prepares for the final stage of its bankruptcy, according to seven store managers interviewed by The Wall Street Journal.

A lawyer and officials of the Englewood-based company didn’t respond to requests to discuss the accelerated shutdown plan, including questions about whether any stores would survive into August. In a May 25 letter to customers, CEO Michael Foss said the stores would be closed by the end of August.

The end could be nearer than that for most Sports Authority stores, said store managers who were summoned to a conference call last week. Sports Authority and the nearly 14,000 jobs it once supported is essentially done at the end of July, they were told. One person who answered the phone at a New York store said he had been told some stores would stay open through August. His store, however, isn’t one of them. An employee at a New Jersey store said staff there was still waiting for word.

“I feel bad for my managers. They really worked hard, and they took it hard,” said an associate at an Exton, Pa., store, who declined to give her name.

On its website, Sports Authority is now advertising “last days” of a liquidation that began with hopes of saving some of the 460 stores. Those hopes washed out in a bankruptcy auction that drew no offers from buyers willing to keep any of the stores open.

“I have a good store, one of the better performers, and I had hopes right up to the end that someone would buy us,” said a store manager in New England who spoke on condition of anonymity. “It’s disappointing, but I’m a professional and I am going to do what I am supposed to do.”

Sports Authority paid off its top-ranking lenders Friday with proceeds of the first rounds of going-out-of-business sales. It raked in more cash from sales of its intellectual property, and some real estate, and there is money in the coffers.

The question is, who gets the cash — lenders that say they’re owed another $240 million, landlords that are still trying to collect the March rent, or suppliers that shipped an estimated $50 million worth of goods to Sports Authority in the months before it filed for bankruptcy?

Sports Authority is due back in court in August to seek approval on a settlement with lenders. Junior creditors weren’t part of the deal, and have said the settlement shortchanges suppliers.

The announcement of an end-of-July mass shutdown wasn’t a shock, but it was an unpleasant surprise to store managers and employees who knew the company was going down, but expected to have jobs through the summer.

The accelerated closure means store managers and other full-time store employees will lose their health care benefits a month earlier than expected. College students, including many hired during the bankruptcy liquidation, will go back to school short a month’s summer earnings.

Most Sports Authority employees are likely not protected by federal laws that require employers to cushion the blow of mass layoffs by advance notice or extra payments, the Worker Adjustment Retraining and Notification Act, according to Jack Raisner, a New York lawyer.

“The point of the law is to let people prepare themselves and adjust,” Raisner said. Big loopholes, however, exempt most stores and restaurants from WARN Act protections, leaving vulnerable employees without protection against the economic dislocation of sudden job loss, he said.

The upset isn’t just economic, said Robert Bies, a professor of management at Georgetown University, who studies bad news in the workplace.

“They have to tell their families. Losing a job isn’t just an economic issue. It’s an identity issue,” Mr. Bies said

Foes of the WARN Act said performance would suffer if employees were given advance notice of mass layoffs. Research shows the opposite, Mr. Bies said. “Productivity went up because people thought if they worked harder, they could save the company.”

At a San Francisco Sports Authority, employees who had left the company came back “to pitch in” for the last days, said team leader David Vannatta.