Modell’s struggles to keep sporting-goods empire alive

Bloomberg

Mitchell Modell, chairman and chief executive officer of Modell’s Sporting Goods, has a framed letter from his grandfather, Henry Modell, hanging on the wall of his New York City office. He said he likes to look it over, to remind him what’s at stake as he struggles to keep the 131-year-old family business afloat.
“Keep and cherish the good name of Modell as long as you live,” the letter reads.
Sports merchandisers have experienced the pain of the retail upheaval that’s led to a wave of bankruptcies and a record number of store closings. For Modell’s, America’s oldest family-owned sporting-goods retailer, trouble deepened last month after a disappointing holiday season pinched cash flow.
Modell, 65, blamed warm weather, which translated to fewer outerwear sales, poor showings by professional teams like the Jets and Giants, which crimped merchandise demand, as well as the old bugaboos — competition from big-box stores like Walmart Inc and online juggernaut Amazon.com Inc. Modell said he’s trying to avoid the fate of rivals such as Sports Authority Inc, which liquidated in 2016, but added that every option is on the table.
“I will leave no stone unturned,” he said in an interview.
Great-grandfather Morris Modell opened the first store on Cortlandt Street in downtown Manhattan in 1889. Three subsequent generations of the family expanded the business into a chain of about 150 stores from Virginia to New Hampshire, according to its website. The current standard bearer said he feels the responsibility of family history every day.
Modell said he’s looking for an outside investor who can keep the doors open, and is so consumed by the search that he sleeps only two or three hours a night. He brought in help from investment bank RBC Capital Markets, advisory shop Berkeley Research Group and law firm Cole Schotz.
Berkeley’s Bob Duffy is serving as the company’s chief restructuring officer.
To succeed, Modell said 90% of the closely held retailer’s
vendors and landlords need to support a turnaround plan.
In return, he promised them greater visibility into the company’s financial performance. Modell said investors are “waiting in the wings” to see what kind of support the retailer can garner.
The company held a call with some of its 300 vendors, which include international brands like Nike, Under Armour, Adidas and Champion. Modell gave his mobile-phone number and email address to everyone.
“Call me or text me,” he said he told them. “If you don’t get a response that same day, try again.”
Modell’s occupies a unique place because “what they have going for them is the relationship with vendors,” said David Wander, a partner at Davidoff Hutcher & Citron LLP, who has represented vendors in retail bankruptcies such as Sears and Sports Authority. He’s not involved with Modell’s.
Vendors will want to keep the retailer out of bankruptcy, Wander said, because they need Modell’s. With Sports Authority gone, only Modell’s and Dick’s Sporting Goods remain for some of them, he said. The company will start reaching out to landlords soon in hopes of negotiating savings on rents, Modell said.