US: Bakers Footwear files for bankruptcy as sales slump
Debt-laden retailer Bakers Footwear Group has filed for Chapter 11 bankruptcy protection after falling sales led the company to default on its credit line.
The formal Chapter 11 reorganisation process will enable the retailer to try to restructure its business operations and lending arrangements.
The move comes less than two months after Bakers Footwear revealed plans to shed more than 70 stores and up to one-third of its staff in an effort to turn around the ailing company.
It says it intends to continue with these measures, which include reducing its retail base by 72-77 stores, selling up to 52 of them to Aldo US for US$6.4m and closing 20-25 under-performing shops this autumn.
The closures and sell-offs will generate up to $7m in annual expense reduction, said Bakers, with a similar amount raised by liquidating inventory. The proceeds from the actions will be used to reduce debt and improve cash flow.
According to SEC filings, company COO Joseph VanderPluym, chief planning officer Stanley Tusman and chief merchandising officer Mark Ianni all lost their jobs. And up to one in three of the company's employees could also be axed under the plans.
The company intends to focus solely on its Bakers brand in the future, restoring its position in the moderately priced footwear market under new leadership, and ending its H by Halston licence on 31 December this year.
Despite the changes, all 215 Bakers stores remain open, the retailer said yesterday (3 October).
"Given the situation, the company is working collaboratively with its stakeholders and moving as quickly and as expeditiously as possible to ensure that value is maximised for all of the constituents and the company can reorganize and emerge from bankruptcy," it added.
A filing with the US Securities and Exchange Commission said that $17.8m is outstanding under its credit agreement with Crystal Financial. Bakers is now asking the court to approve up to $22m in debtor-in-possession financing from Crystal.
A separate filing last month said second-quarter net sales dropped 11.4% year-on-year, while comparable store sales fell 7.5%.
Bakers Footwear Group has hired Great American Group to liquidate inventory at the retailer's 56 remaining stores and online....
Bankrupt retailer Bakers Footwear Group has abandoned plans to restructure its business and now intends to liquidate or sell all of its remaining assets....
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