Modell’s Sporting Goods has re-hired Berkeley Research Group “for a full-fledged balance sheet restructuring” and Cole Schotz for legal advice with plans “for a potential in-court restructuring,” according to a report from Debtwire.
The report came Tuesday and Mitchell Modell, the chief executive officer of the family-owned retailer, confirmed the hirings in an interview with Retail Dive. Modell is also looking for outside investment
He told Retail Dive that “all options are on the table,” although undergoing a bankruptcy restructuring isn’t being considered at this time. Modell said he’s calling vendors this week and plans to reach out to landlords next week. Vendors, he said, have been “incredibly supportive.”
The situation recalls Modell’s scramble to shore up credit to avoid a bankruptcy filing at about the same time last year.
The Wall Street Journal reported on March 11, 2019, that Modell’s had retained Berkeley Research Group, a consulting firm known for its work for bankrupt companies, as an advisor and many vendors subsequently stopped shipping the chain. A Debtwire report later indicated that Cole Schotz was also retained for strategic alternatives.
Modell and his merchandising chief, Charles Castaneda, contacted the top executives at 300 suppliers, providing them with the company’s financials under nondisclosure agreements. Landlords were also contacted. In a follow-up WSJ article on April 28, Modell said 297 of the 300 were shipping to the retailer, including Nike.
Modell also last year injected $6.8 million of fresh capital into the company to shore up the balance sheet as a sign of confidence. Nine stores were closed last year and additional closures may be considered as leases expire.
Still, Modell told Retail Dive that it took until December to reach appropriate inventory levels. The New York-based chain, which has over 150 stores, also had a subpar holiday season.
“We also had a long, dry winter, and all our teams were horrible,” Modell said. Modell’s had a large fan apparel business. Those pressures, combined with competition from Amazon, “put us in a tough situation. But, listen, everybody goes through a tough situation at times.”
Photo courtesy Modell’s Sporting Goods
