The retail-pruning phase is no overnight process.
The frantic wave of retail bankruptcy filings and liquidations that started around 2016 saw dozens of mainstays, including The Sports Authority, The Limited, Toys R Us and Eastern Mountain Sports, hang up their hats. More often than not, struggling firms counted massive debts, the rise of Amazon, overall digital disruption and consumer shifts toward experiential spending as the biggest factors leading to their demise.
More recently, however, with companies like Walmart, Target and Nordstrom leading the way, many retailers seemed to have found their footing — implementing omnichannel-savvy concepts and upping their in-store experiences.
Still, others continue to trickle into bankruptcy court, citing much of the same challenges as those that preceded them.
Here, less than three months into the year, we round up four shoe sellers that have gone bankrupt in 2019.
The teen mall staple filed for Chapter 11 protection in early February with plans to shutter about 94 of its 500 stores and continue the business as a going concern. The retailer’s efforts to secure a buyer and stay in business, however, fell short, and last week, it announced plans to shut down its website and close all remaining stores. In a bankruptcy declaration with the courts, chief restructuring officer Brian Cashman said the retailer “suffered from a dramatic decrease in sales and in-store traffic, and their merchandising and marketing strategies failed to connect with their core demographic and outpace the rapidly evolving fashion trends that are fundamental to their success.”
After one failed bankruptcy in 2017, Payless ShoeSource last month announced a second Chapter 11 filing — but this time, the retailer said it would shutter all 2,500 of its North American stores. The company, which had prioritized Hispanic consumers as part of its 2017 post-bankruptcy restructuring plan, said it would continue to operate its 420 stores across 20 countries in Latin America, those in the U.S. Virgin Islands, Guam and Saipan, and its 370 international franchisee locations in 16 countries across the Middle East, India, Indonesia, Indochina, the Philippines and Africa. The company, which had struggled since a highly leveraged private equity buyout in 2012, had grappled with waning relevance and a failure effectively implement new omnichannel concepts, experts contended.
“They didn’t really have enough time to evolve the business model, given the financial constraints they had to contend with,” explained B. Riley FBR analyst Jeff Van Sinderen in February, noting that Payless wasn’t helped by a “so-so” 2018 retail holiday season. “Not being omnidigitally relevant hurt them.”
In January, kids’ clothing and accessories store chain Gymboree Group Inc. took its woes to bankruptcy court for the second time in less than two years — but this time, it’s for good. The retailer — parent of Gymboree and Crazy 8 stores — said in January’s Chapter 11 filing that it would liquidate all 800 of its stores. CEO Shaz Kahng — who had taken the post in November — said he was “saddened and highly disappointed” about the decision to wind down the retail outposts but noted that the company was focused on using the bankruptcy process to preserve the Janie and Jack business. That brand was acquired by Gap Inc. last week at a bankruptcy auction, while Gymboree rival The Children’s Place snapped up the rights to the Crazy 8 and Gymboree brands.
Shoes of Prey
The high-end shoe startup that sought to disrupt the market with customization is no more. The brand, founded by husband and wife Michael and Jodie Fox, as well as Mike Knapp, announced this week that it would take the liquidation route after a stretch of faltering sales stemming from its admitted failure to resonate with mass-market consumers. “Despite all the right trends towards personalization and our success within the customization niche, contrary to our market research, the mass-market fashion customer just didn’t respond as we expected,” co-founder Michael Fox said in a post he penned for Medium this week. “We learned the hard way that mass-market customers don’t want to create; they want to be inspired and shown what to wear. They want to see the latest trends, what celebrities and Instagram influencers are wearing, and they want to wear exactly that — both the style and the brand.”