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.
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.
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.
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.
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.
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.”
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.
These conditions have left the company’s cash reserves struggling and complicated dealings with vendors.
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.
Instead of buying shoes, many consumers are saving to pay for groceries and essential items.
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.
The company tried to explore every possible route from selling off to swapping debt for equity.
Sale Saga: A Bumpy Road
Efforts to strike a new deal hit a snag by March, and even though six potential buyers stepped forward.
However, their offers didn’t meet the lenders’ $290 million benchmark to free up the assets.
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.
Such a choice was a tactical move to keep the sale process on track and the company’s future secure.
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.
This financial pressure is part of a larger $480 million debt burden they’re shouldering.
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.
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.
Business Sales: A Revenue Mainstay
Business-to-business transactions have been a significant revenue stream, accounting for nearly 76% of 2023’s total intake.
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.
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.
Annually, they put about 4 million pairs of shoes on feet worldwide, supporting over 30,000 corporate clients.
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.
The company also has international entities elsewhere in the world, such as in Asia, the Pacific, and Canada.
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.
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.
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.
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.
Online Shopping
While online shopping has increasingly become popular for many consumers, the COVID-19 pandemic allowed this trend to skyrocket.
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.
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.
This realization has made many brands, such as Crews, struggle to adapt to an ever-shifting retail landscape.
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.
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.
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.
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.
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 workers need slip-resistant shoes that are comfortable and reliable. Crews was — and may continue to be — a brand that people rely on.
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.
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.”
