Golfsmith International Holdings Inc. has filed a voluntary Chapter 11 petition for bankruptcy court protection.
The filing was made Wednesday in a Delaware bankruptcy court. The company said it has between 5,000 and 10,000 creditors, with estimated assets and liabilities each in the range of $100 million to $500 million. The filing also includes affiliates, such as Golf Town.
According to the petition, among the top unsecured creditors are: Callaway Golf in Carlsbad, Calif., at $5.5 million; and Nike USA Inc. in Beaverton, Ore., at $3.5 million.
Golfsmith International is one of North America’s largest specialty retailers of golf equipment, apparel and accessories. It operates online, through direct mail catalogues and in physical stores under the Golfsmith and Golf Town nameplates. There are 109 Golfsmith stores in the U.S. and 55 Golf Town stores in Canada.
Brian E. Cejka, chief restructuring officer, said in his declaration in support of the filing and first day orders, “Recently, economic downturns, industry trends and global shifts in consumer behavior all have put significant pressure on [Golfsmith’s] operational performance.” He noted the impact on retail from the 2008 recession, the shift by consumers away from traditional bricks-and-mortar to online platforms, and the waning of the enthusiasm underpinning the “Tiger Woods Phenomenon.” Those factors came at the same time the company was expanding its store base, Cejka said in the court document.
Cejka also said that in recent months, several of the retailer’s key vendors have “tightened trade terms,” which in turn constricted its ability to access inventory.
Prior to filing its Chapter 11 petition, the company received a binding proposal from Fairfax Financial Holdings Ltd. and CI Investments Inc. for the purchase of its Canadian business, which operates under the name Golf Town.
Cejka also said the company plans to use the bankruptcy filing to “stabilize” the business and pursue an operational and financial restructuring around a smaller footprint of profitable Golfsmith stores. At the same time, Golfsmith will pursue a dual track strategy that would include the sale of its assets as it tries to restructure operations. That second option would give the company the opportunity to go ahead with a sale if it is determined to bring better value for the constituency groups in the bankruptcy.
Golfsmith is the latest sports-related retailer to file for bankruptcy court protection. Its filing follows that of Sports Authority, Sports Chalet and other specialty retailers such as Quiksilver and Pacific Sunwear of California.