No broad conclusions about the retail environment can be inferredfrom sporting goods retailer Sports Authority's decision to liquidate rather thanpursue reorganization, Brixmor PropertyGroup Inc.'s interim leadership said on the company's first-quarterearnings call April 27.
Sports Authority, which filed for bankruptcy protection in March,gave up on reorganization this week, and a lawyer for the retailer told a bankruptcycourt that it will pursue a sale in May. An analyst quizzed Interim President andCEO Daniel Hurwitz about the troubled retailer first-thing during the call's Q&Asegment.
Bank of America Merrill Lynch analyst Craig Schmidt noted thatan increasing number of troubled chains are opting for liquidation over reorganization.
"Is there any pressure on retailers that may be accountingfor this?" he asked.
"I think it's an individual case-by-case basis where individualretailers will assess the viability of their business plan and their strategy,"Hurwitz said, later adding, "A lot of it depends on what the category is, whatthe future of that category is, and what the future distribution channels are goingto be for those categories."
But Hurwitz acknowledged the headwinds sporting goods retailers,which sell commodity goods at low margins, have faced in recent years.
"It's very hard to justify not only the square footage thatsome of the retailers have, but some of the merchandise that they carry, which haslow inventory turn and low productivity per square foot. … And obviously there wasnot a compelling business model that would prompt others to invest in Sports Authorityfor it to continue going forward," he said.
Some further detail emerged on the call about the process surroundingthe company's new C-suitehires.
Hurwitz confirmed that the hiring of CFO Angela Aman had been"Jim's search," referring to incoming CEO James Taylor, despite the factthat Taylor had been hired only two weeks before.
"It really wasn't handled by the board at all," Hurwitzsaid. "It was handled almost exclusively by Jim, who made a recommendationto the board, and he handled the negotiations, and he handled the conversationswith Angela. And we have said all along that we thought that the hiring of the CFOwas the responsibility of the CEO, and he got to work obviously right away as soonas he became our CEO, and we supported those efforts."
At the call's outset, Hurwitz doffed his hat to Presidentand CEO Donald Wood for his handling of the appointment of Taylor, who will step down as CFO of Federal Realtyon May 19.
"It is never easy to part ways with a most trusted partnerand close friend, and yet the excitement and genuine support Don displayed for Jimto take this next step in his career was truly admirable," he said. "Wethank Don for the decorum and class with which he handled the situation."