The firm, which filed in Santa Barbara, Calif., on Monday, said it hopes to emerge from Chapter 11 in early 2010 and that it seeks to shed its unprofitable stores.
“This action is an unfortunate but necessary and responsible step to preserve The Walking Co.’s value for its secured creditors, vendors, landlords, additional creditors and employees in light of the ongoing challenging retail environment,” Andrew Feshbach, CEO of The Walking Co., said in a statement released Monday evening. “We believe our business model is sustainable in today’s world, despite declining consumer spending and mall traffic at present. However, the unfortunate timing of our rapid expansion caused us to enter into lease commitments at what now appears to be the high water mark for retail space. The chapter process will allow us to shed our unprofitable stores and go forward as a financially viable retailer.”
The Walking Co. said it rapidly expanded its chain of footwear stores from 2005 to 2008 and that most of those lease rents are now “at or above the market rates for malls across the U.S.” Its landlords have not been willing to adjust occupancy costs.
In early 2009, the firm had terminated 500 employees and cut salaries in an effort to free up $10 million to $15 million in cash flow. At that time, The Walking Co. said it lost $12 million in 2008.
The company, which operates 210 stores nationwide, has also closed the majority of its Big Dogs stores, now operating only a handful of those units.