Footwear retailer The Walking Company Holdings Inc has axed more than 500 jobs and cut compensation for all remaining employees as part of a financial restructuring plan detailed today (23 March).

Between them, the job cuts (which are mostly at its Big Dogs business) and the compensation cuts (the largest of which are being borne by the executive team) will reduce overheads by 20%.

Other measures include an increase in available lines of credit, an agreement with bond holders to allow PIK (pay in kind) interest for up to two years, and a request to landlords for a reduction in rent for the rest of this year. 

The unpaid rent will be returned to the landlords out of profits generated by the company in 2009 or 2010, it says. 

The Santa Barbara, California-based company which operates 201 The Walking Company stores, expects the financial restructuring to generate $10m in annual cash savings and up to $15m in improved cash flow and credit.

"We believe the measures...give us the financial flexibility and wherewithal to navigate this negative retail environment," said CEO Andrew Feshbach.

The changes were deemed necessary amid the current difficult environment for obtaining debt or equity financing, and rumours about the company's financial status that led to the loss of some vendor credit.

The company has also been liquidating its Big Dog outlet chain to raise cash and reduce debts after failing to find a buyer.

The chain has been reduced from 131 to just 14 stores, and the company says it is currently evaluating a number of options "to garner value from the brand."

It also plans to delist its stock from NASDAQ and deregister under the Securities Exchange Act. This means it will no longer file public statements with the SEC and is also reducing the size of its board of directors accordingly.

The company said its fourth quarter sales rose 4% to $79.6m, and full-year sales for the 12 months to 31 December were up 3.5% to $241.5m.

Same-store sales for the year rose 4%, helped by strong sales of Ugg Australia boots and women's products.

Looking ahead, comparative store sales in the first quarter of 2009 are likwly to be down mid to high single digits.