Jeremy Lin's move to the Rockets is expensive not just for Knicks fans but Modell's Sporting Goods. Remember in the 2011-2012 basketball season we had a little thing in New York called Linsanity? The hype surrounding Knicks point guard Jeremy Lin was incredible. Like the flavor of the month (Baloteli, Smarty Jones, etc.), everyone simply had to have Lin gear. And now it appears that manufacturing all that gear will cost Modell's to the tune of $1 million.
With Lin poised to move to Houston, guess who’s sitting on 40,000 Lin-related items across its 150 stores? Modell’s Sporting Goods. The company is expected to dump these goods at true fire sale prices. Expect $5 t-shirts and the like. This will prove to be a huge headache and cost for the company. Per Hedgeye Retail:
“If we assume a conservative $30 ASP per unit, this would equate to a 80%+ discount (t-shirts: $24.99, Jersey $89.99) to flush inventory resulting in over $1mm in lost sales. With Modell’s revenue nearing an estimated $700mm in 2011, each store (105 of 150 stores in tri-state area) could have nearly $7K of the quarter’s ~$1.03mm/store at risk.”
With that kind of loss, the least Lin could do is swing by the Times Square location and sign a couple of jerseys before he hops on his jet to Houston.