JumboSports hints at bankruptcy

Discount Store News, Jan 4, 1999

TAMPA, FLA -- Continued sales declines and the prospect that vendors may stop shipping merchandise has JumboSports indicating it may have to file for bankruptcy.

Prior to Christmas, the 59-store sporting goods chain stated the following in its quarterly filing with the SEC "Adverse credit decisions by the company's merchandise suppliers could cause material disruptions in future merchandise flows and thereby adversely affect the company's liquidity and its ability to meet its future cash requirements and consequently force the company to file for protection under Chapter 11 of the bankruptcy code."

JumboSports said its suppliers have expressed concern over its future viability, adding ["they] have indicated to management that the relative success of the retailer's Christmas selling season is material to their credit decision-making process."

Unless JumboSports makes an exception, vendors won't learn the retailer's sales results for months. The company doesn't release monthly figures, and typically its fourth quarter results haven't been available until late March. Even so, the retailer's past sales performance provides little reason to be optimistic about holiday results.

Through the first three quarters of this year, JumboSports recorded a net loss of $32 million on sales of $260 million. The previous year, the company recorded a $111 million net loss on sales of $528 million. The year before that, the loss amounted to $30.5 million on sales of $624 million. Most of the losses are related to charges the company has taken to restructure, close stores and dispose of inventory, but negative same store sales and the past disruption of vendor shipments also hurt.

Helping push JumboSports into the Chapter 11 arena is its lack of options Other sporting goods chains, many of which are also struggling, are not interested in acquiring its troubled operation.

"Discussions with potential business partners have been preliminary only, and management does not believe that such a sale or business combination is likely in the foreseeable future," the company said in its SEC filing.