Sports Authority Seeks to Honor Gift Cards, Rewards Program in Chapt...

If you have a Sports Authority gift card, take heart—one of the retailer’s first requests in its new chapter 11 bankruptcy case is to continue honoring them.

Sports Authority, which filed for chapter 11 protection Wednesday, has asked a bankruptcy judge to approve a variety of requests designed to keep it operating while it restructures and closes unprofitable stores, including honoring gift cards and continuing its reward program. The retailer told the judge that its ability to do so “is necessary to retain their customer base and reputation within their industry.”

Sports Authority has about $93 million in outstanding gift cards, court papers show. Companies in bankruptcy don’t have to honor gift cards, but many do to keep customers happy. (Many retailers and shoppers have learned this the hard way.)

The retailer also wants to continue its shoppers loyalty program, called The League by Sports Authority. About 28.8 million people are enrolled in the program, in which they earn one point for every $1 spent at a Sports Authority store or online. Points are converted to rewards that customers can use on future purchases. The retailer says an estimated 128.4 million points were outstanding in January, worth about $1.1 million. Another $22 million in reward certificates were outstanding as of Jan. 25, Sports Authority said.

“Continuing the rewards program [and] continuing to award and honor the reward certificates…are all essential to maintaining customer relationships and driving sales,” the company said in the filing.

Sales will be important for Sports Authority, which will be selling off the merchandise at up to 200 stores it plans to close in the restructuring. It needs to find a buyer for its remaining stores to avoid a company-wide shutdown, The Wall Street Journal reported.

Its request will be subject to the approval of the U.S. Bankruptcy Court in Wilmington, Del., which will also review such proposals as a $595 million bankruptcy-financing package.

Write to Jacqueline Palank at [email protected]. Follow her on Twitter at @PalankJ