Dive Brief:

• Modell's Sporting Goods has tapped real estate adviser A&G Realty Partners for a lease-renegotiation effort, according to a report from Debtwire citing "two sources familiar with the matter" that was emailed to Retail Dive. Modell's didn't immediately return Retail Dive's request for comment.

• The sporting goods retailer is also working with Cole Schotz and Berkeley Research Group on strategic alternatives, according to the report. That previously reported news sent Modell's CEO Mitchell Modell on a campaign in recent weeks to woo back vendors spooked by the revelation, according to the Wall Street Journal.

• In a rental payment outlook from over a year ago, Modell's projected that outlays would decline in the next few years from $66,978 in 2019 to $61,219 in 2020 and then to $52,817 in 2021, according to the report from Debtwire Middle Market Restructuring Reporter Tanvi Acharya.

Dive Insight:

Modell's has been around the retail block a few times, and finding the ideal footprint has been a juggling act for decades, as it is for any retailer. "MODELL'S IS FACING QUADRUPLED RENTAL," for example, was the all-caps headline of a 1978 New York Times story, at a time when the company sold "dry goods" in addition to sports gear and apparel.

Modell's is now a regional sporting goods retailer that is "very strong in New York with about 150 stores from New York to the Washington, DC area," according to Nick Egelanian, president of retail development consultants SiteWorks. "They have a niche between the larger sports stores like Dick's and smaller local sports specialty stores. There is a West Coast chain called Big Five that is similar in positioning but much larger at 450 stores."

Its pivot to that specialty may have made sense several years ago, but now that space is in turmoil. Sales are under pressure, including for market leader Dick's, as brands like Nike and Adidas boost their direct sales to customers. The challenges, which for many include too many stores in an era of growing online sales, felled Sports Authority in 2016, sent Eastern Mountain Sports and Bob's into Chapter 11, and forced regional player Hibbet to finally enter e-commerce last year.

Modell's is also finally adding more e-commerce and omnichannel sales, and that could be another reason to shrink its brick-and-mortar operations. "While renegotiating leases could be a sign of trouble, it could also be part of a company initiative to right-size its stores and generally tighten up its leases in a soft retail market," Egelanian​ told Retail Dive in an email.

The rent payment outlook is probably a target that Modell's hopes to achieve, according to Debtwire's Acharya, who noted that the retailer closed at least four stores last year and will likely shutter more. While according to news reports some vendors were alarmed that Modell's is turning to outside firms, it's not necessarily a sign of deep difficulty, she also said.

"It's definitely not uncommon, or unique to Modell's," Acharya told Retail Dive in an interview. "It makes sense when the environment is tough that you would bring in people to help you and find the best solution. I think the most important thing is the rental payment outlook and that it's an example of what's going on in the space, the continued distress in retail and the competitive sporting goods space."