Major Shoe Brand Files for Bankruptcy

By: Georgia | Last updated: Apr 15, 2024

Shoes for Crews, a major player in the production of slip-resistant footwear, along with several of its American affiliates, has filed for Chapter 11 bankruptcy in Delaware. 

But it’s not all doom and gloom; they’ve managed to secure a lifeline of $30 million in financing to keep the wheels turning and ensure that their production and distribution can continue.

The Financial Highwire

The Wall Street Journal reports that Shoes for Crews is walking a tightrope with liabilities somewhere between half a billion to a billion dollars, compared to $100 million in assets. 

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A man in a Carlsbad uniform, wearing a cap and sunglasses, is smiling as he stands on the steps of a delivery truck that advertises 'Shoes for Crews'. He is holding a yellow DeWALT shoebox

Source:Shoes For Crews/Facebook

The list of who they owe includes big names like Ceva Logistics and New Balance, tallying up to over $20.5 million.

A Fresh Start

The goal now? Shoes for Crews is actively seeking to sell the business and continue operations under new ownership.

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A close-up image showing a person's feet wearing black work boots with a rugged sole, standing on a yellow-painted curb

Source: Shoes For Crews/Facebook

Backed by their main lenders, they’re looking to seal the deal on a sale in the next couple of months, as per the latest updates from the court and company statements.

About Crews

For decades now, Crews has been a popular shoe brand for many employees. These shoes are made specifically for those who work in the service industries.

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A person wearing sneakers outside.

Source: Dan Gold/Unsplash

As a result, all of Crews’ shoes are made slip-resistant. Workers can safely wear these shoes while on the job, regardless of what they’re doing, and feel confident that they won’t slip and fall.

The History of Crews

Founded in 1984 in New York City, Shoes for Crews was established by Stanley Smith and Matthew Smith, a father and son duo. In 1995, the company moved its headquarters from New York City to Florida.

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A person wearing white shoes at the beach.

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In 2001, Crews entered the European market for the first time.

The Creation of Shoes for Crews

On the company’s website, they further expand on why they decided to create the brand Shoes for Crews.

A person wearing white sneakers.

Source: Marten Bjork/Unsplash

The company explained, “40 years ago, our founder Stan Smith noticed a rise in workplace injuries caused by slip and falls and discovered a need to create a solution that would eliminate the problem. In 1984, the Shoes For Crews brand was formed, and our slip-resistant outsole technology was invented.”

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Catalysts for Bankruptcy

What got them here? A perfect storm of inflation spikes, retail woes, a pivot to online shopping, and the economic fallout from the pandemic, the company’s CFO, Christopher Sim explained.

A man in grey scrubs is crouched down, tying his shoe in a medical office environment

Source: Shoes For Crews/Facebook

These conditions have left the company’s cash reserves struggling and complicated dealings with vendors.

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Blaming Inflation

In its bankruptcy filing, Crews also explained that inflation played a role in its eventual filing. High inflation in the United States has caused many shoppers to think twice about buying items they may not need.

A close-up of American dollar bills.

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Instead of buying shoes, many consumers are saving to pay for groceries and essential items.

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Navigating Out of Troubled Waters

As the liquidity crisis hit its peak in late 2023, court documents reveal that Shoes for Crews hired Ropes & Gray for legal advice and Solomon Partners Securities for financial strategies.

A person is wearing black high-top sneakers paired with grey skinny jeans

Source: Shoes For Crews/Facebook

The company tried to explore every possible route from selling off to swapping debt for equity.

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Sale Saga: A Bumpy Road

Efforts to strike a new deal hit a snag by March, and even though six potential buyers stepped forward.

A close-up view of several pairs of athletic shoes in different colors and designs. In the foreground, there's a shoe with a green and grey upper and a white sole

Source: Shoes For Crews/Facebook

However, their offers didn’t meet the lenders’ $290 million benchmark to free up the assets.

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A New Strategy Emerges

The lack of a new deal prompted a pivot to consider a “stalking horse” bid to keep the company afloat, Bloomberg reports.

A close-up image of a person's feet wearing DEWALT branded black work boots with a chunky sole

Source: Shoes For Crews/Facebook

Such a choice was a tactical move to keep the sale process on track and the company’s future secure.

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Counting Down on Debt

With a looming maturity date for their pre-bankruptcy credit facility, Shoes for Crews is staring down the barrel of approximately $282.2 million in outstanding debt. 

A worker in a warehouse is captured in motion, using a manual pallet jack to move goods. She is wearing black shoes, beige cargo pants, a white hoodie

Source: Shoes For Crews/Facebook

This financial pressure is part of a larger $480 million debt burden they’re shouldering.

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Keeping the Ship Afloat

Retail Dive notes that despite the fiscal storm, Shoes for Crews has kept its sails up, thanks to diverse sales channels.

A close-up of two feet raised against a tennis court fence, showcasing dark blue dress shoes with a dotted pattern and matching blue socks

Source: Shoes For Crews/Facebook

Whether it’s through corporate contracts, direct sales from their website, or platforms like Amazon, they’ve been able to keep their market presence strong.

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Business Sales: A Revenue Mainstay

Business-to-business transactions have been a significant revenue stream, accounting for nearly 76% of 2023’s total intake. 

The photo captures a person's feet suspended in the air with the sky as the backdrop

Source: Shoes For Crews/Facebook

Whilst this sector has been a steady source of revenue, direct-to-consumer sales have also played a significant role, with the company owning two physical stores in the US.

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The Heartbeat of the Operation

Rooted in Florida, at the heart of the company is its team of about 340 employees and a sprawling distribution network. 

A variety of sneakers are displayed on a glass shelf inside a store. The collection includes shoes in different colors and styles, from blue and gray to vibrant pink

Source: Shoes For Crews/Facebook

Annually, they put about 4 million pairs of shoes on feet worldwide, supporting over 30,000 corporate clients.

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Crews in Europe

Shoes for Crews products are also for sale in Europe. The company has grown immensely throughout Europe since it was first introduced in 2001. Recently, the brand has expanded its reach into Italy and Spain.

A bird’s eye view of Matera, Italy seen at sunset.

Source: Daniele Levis Pelusi/Unsplash

The company also has international entities elsewhere in the world, such as in Asia, the Pacific, and Canada.

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Bankruptcy in Europe

Crews’ bankruptcy filing is only in the United States. Therefore, the company’s international entities will not be affected by this ongoing bankruptcy case.

A bird’s eye view of Madrid, Spain seen in the daytime.

Source: Jorge Fernández Salas/Unsplash

These international entities also will not be affected, in any way, by what occurs after this bankruptcy in the United States. Their operations will continue on as normal.

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A Shift in Consumer Trends

The announcement of Crews’ Chapter 11 bankruptcy filing is yet another notable change in the retail world. Upon filing for bankruptcy, Crews explained that consumer changes are some of the reasons why they’re facing bankruptcy.

A woman sitting on the floor while typing on her laptop.

Source: Thought Catalog/Unsplash

This shift in consumer trends — specifically, consumers moving from shopping at brick-and-mortar stores to now shopping online — has led to many brands and stores to struggle.

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Online Shopping

While online shopping has increasingly become popular for many consumers, the COVID-19 pandemic allowed this trend to skyrocket.

A woman holding a phone while also on her laptop.

Source: Firmbee.com/Unsplash

Now, many consumers in the United States and around the world enjoy online shopping, rather than going to a store and picking out shoes or clothing items.

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Online Shopping Is Here To Stay

According to new data, 66% of buyers now purchase items online that they used to buy in-store. Many studies hint that online shopping is here to stay.

A man holding a credit card while using his laptop.

Source: rupixen/Unsplash

This realization has made many brands, such as Crews, struggle to adapt to an ever-shifting retail landscape.

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Competition in the Sneaker Space

Competition in the sneaker space has been relatively hard for many companies for decades now. Across the board, this is because of Nike.

Nike sneakers against a white background.

Source: Barrett Ward/Unsplash

Though Nike has had some recent problems that have hurt its overall business, the company still remains the number one shoe company in the world.

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Finding a Spot in the Footwear Industry

Even though Nike remains the number one footwear company, other brands have managed to create their own spot within the footwear industry.

A Skechers store seen in the evening with people outside of it.

Source: Venti Views/Unsplash

Skechers is one great example of a footwear brand that has managed to create its own devoted following of shoppers, even as Nike continues to dominate.

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Crews in the Industry

Crews had also been quite successful in creating their own space within the footwear industry. By dedicating their products to be for employees, the company’s slip-resistant shoes did thrive, once upon a time.

Many different sneakers on a wall at a store.

Source: Edgar Chaparro/Unsplash

Many workers need slip-resistant shoes that are comfortable and reliable. Crews was — and may continue to be — a brand that people rely on.

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Looking Forward with Hope

President and CEO Donald Watros, sees the bankruptcy not as an end but as a strategic pivot towards an optimistic future. 

Inside a shoe store with bright blue walls and modern décor, customers browse various footwear collections displayed on wall-mounted shelves

Source: Shoes For Crews/Facebook

He said “Today’s announcement marks an important step forward for Shoes For Crews that will position us financially to continue investing in our industry-leading products and delivering for our valued customers well into the future. We are confident that with a stronger balance sheet and the strong support of new ownership, Shoes For Crews will be on track to continue in our mission of creating a safer workplace by continuing to develop and provide the leading slip-resistant footwear to bring every employee home safely.”

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