A report that ran Sunday in the Wall Street Journal shows that Modell’s Sporting Goods has regained shipments from the wide majority of its vendor base following concerns over the sporting goods retailer’s hiring of a restructuring firm.
A WSJ article from April 11 indicated that Modell’s had hired BRG, a consulting firm known for its work for bankrupt companies, as an advisor and many vendors subsequently stopped shipping the chain.
In an interview with the WSJ, Mitchell Modell, chief executive, stated that daily shipments to Modell’s distribution center had slowed to 7,000 from 18,000.
Modell said his team then pursued a strategy to ”overcommunicate” with suppliers, according to the report. The CEO and his merchandising chief, Charles Castaneda contacted 300 suppliers from the CEO, CFO and credit officer levels, providing them with the company’s financials under nondisclosure agreements.
As a result, 297 of the 300 are shipping to the retailer, including Nike.
Modell also plans to inject $6.8 million of fresh capital into the company to shore up the balance sheet. A new CFO, David Stern, has been hired to replace BRG’s Mark Renzi and BRG’s assignment with the company has ended.
The concerns from vendors were also due to a poor December and January for Modell’s due to warm weather and tough comparisons against the Philadelphia Eagle’s Super Bowl win the prior year. Modell admitted that the number of bankruptcies that have hit the sporting goods sector also played a role.
“My suppliers hear the same thing about so many other retailers and they all got burned,” he told the WSJ. “Why not me? The difference is my name is on the door.”
Image courtesy Modell’s