Crushed by billions of debts! Another big seller files for bankruptcy

When the dividend tide recedes, more and more big sellers are eliminated.    

Layoffs, bankruptcies, and store closures are nothing new in the cross-border circle. They happen almost every once in a while, and most of them involve top old-brand sellers. This time, the bankruptcy of Shoes for Crews really surprised many people in the industry.

Amazon's top shoe seller Shoes for Crews files for bankruptcy

Recently, Amazon's major shoe brand Shoes for Crews filed for bankruptcy protection in Delaware, USA.

According to the bankruptcy agreement, Shoes for Crews entered into a tracking asset purchase agreement to sell the business, and plans to complete the sale process within two months. At the same time, it signed an agreement to obtain $3 million in debtor-in-possession financing to keep the company operating during the bankruptcy process.

As the pioneer of anti-slip shoes in the United States, Shoes for Crews was founded in 1984. For more than 40 years since its establishment, Shoes for Crews has been committed to the development of anti-slip shoes and is a leading seller in the anti-slip shoe category on platforms such as Amazon and Walmart. Taking Amazon as an example, black anti-slip shoes are very popular, with product prices ranging from US$50 to US$70, and popular items have more than 2,000 reviews, or even tens of thousands.

Not only that, Shoes for Crews also cooperated with big brands such as New Balance and Puma, but now it has embarked on the path of bankruptcy protection, which is mixed with multiple factors.

The debt problem is undoubtedly the most serious issue. According to statistics, Shoes for Crews has a debt of 500 million to 1 billion US dollars, of which the top ten creditors owe a total of more than 20.5 million US dollars. A thorough investigation of its bankruptcy application documents shows that the demise of Shoes for Crews is inseparable from its logistics debt.

Debts to freight and logistics companies alone account for 41% of the company's total debt, about $10 million. It can be said that logistics debt is the biggest "helping factor" that crushed Shoes for Crews. Looking at the companies, Shoes for Crews' largest creditor is Ceva Logistics, a subsidiary of CMA CGM, which is owed $8.2 million; Vandegrift, a subsidiary of Maersk, ranks fourth, with $1.5 million owed.

In addition, Shoes for Crews' creditors include well-known logistics operators such as VCW Logistics, Purolator, and FedEx. To a certain extent, this shows that the cost of the logistics chain is high. For other companies, how to effectively control costs and risks is also a question worth pondering.

There are many cases of big-selling brands with halos on their heads but frequently encountering problems. In addition to Shoes for Crews mentioned earlier , there is also Allbirds, a footwear company that has recently faced a crisis.

Allbirds loses $300 million in 3 years, on the verge of delisting

Allbirds, which became famous for its iconic wool sneakers on the day of its launch, was once regarded as the standard for Silicon Valley elites. Its unique and environmentally friendly design concept is favored by high-end people such as Apple CEO Cook and Alibaba founder Jack Ma.

The extremely high starting point also allowed Allbirds to have a smooth journey. Five years after its establishment, in 2021, Allbirds was listed on the Nasdaq. On the first day of listing, the stock price was as high as US$28.89 per share. The market value exceeded the previous valuation by more than 1 times, reaching US$4.135 billion, attracting much attention.

But all this changed after its listing, and the company began to lose money year after year, from a loss of US$45 million in 2021 to a loss of US$150 million in 2023. The revenue growth of Angpao and HOKA, which came out at the same time as Allbirds, was also over 55% in 2022, but Allbirds had a net loss of more than US$100 million.

To this end, Allbirds began to try strategic transformation, improving its products to enter the professional sports shoes market, transforming to a distributor model, and entering platforms such as Amazon, hoping to turn losses into profits. However, judging from the current situation, there is still a long way to go. On Amazon, its layout is still in its infancy, with monthly sales of single products mostly over 50, and the number of reviews is pitifully small.

Although rated as "the most comfortable shoes in the world", according to consumer feedback, Allbirds are not comfortable to wear. The wool sneakers have poor breathability and smell bad, while the mesh shoes are too thin and often get torn by the thumb, which is very embarrassing.

During the same period, the company's stock price began to decline. By the end of 2023, Allbirds' market value fell to only $150 million. On April 10, it even hit $0.6 per share, with a market value of just over $90 million, which was nearly 98% lower than the market value on the first day of listing.

As both its performance and stock price declined, Allbirds received a notice from Nasdaq stating that its stock price had fallen below $1 per share for 30 consecutive days. If Allbirds fails to achieve a share price closing above $1 for 10 consecutive working days within 6 months, it will face the risk of delisting.

Allbirds had a starting point that was out of reach for emerging brands, but gradually fell into decline during its business expansion. It can be said that it played a good hand badly.

Bankruptcy wave? Many well-known American companies have collapsed

Many times, it is the last straw that breaks the camel's back. This also applies to the current situation in the United States where companies are filing for bankruptcy on a large scale, are on the verge of delisting, and are even selling subsidiaries or businesses.

Founded in 1980, Express, a well-known American fashion retailer, has long relied on clothing products as its mainstay, but was delisted from the New York Stock Exchange in March of this year. Recently, Express also filed an application with the Delaware Bankruptcy Court, and will close more than 100 stores and only keep its online channel business operating normally.

The sportswear brand Champion was sold to its parent company for $1.2 billion, and the transaction is expected to be completed in the second half of the year. It is reported that as of the first quarter of this year, Champion's sales have fallen for seven consecutive quarters, and the parent company has no choice but to sell Champion to alleviate its current difficulties.

There are many similar cases. Many well-known American companies have chosen bankruptcy as a solution. In March, Joann Department Store, an American fabric and handicraft retailer, filed for bankruptcy because it could not afford its huge debts. In April, 99 Cent Stores, an American discount retailer, filed for bankruptcy and closed more than 300 chain stores. These are all bloody examples of companies going bankrupt.

American retail giants have gone through a difficult period. Those that have managed to hold on have a glimmer of hope, but overall, the majority of giants have not been able to hold on. As of November last year, 591 companies in the United States had filed for bankruptcy, setting a new record for the number of corporate bankruptcy filings in the United States since 2020.

Among them are giants that have been deeply involved in the market for many years, such as the 50-year-old American home furnishing retailer Bed Bath & Beyond and the national discount home furnishing brand Tuesday Morning. The collapse of retail giants is just a microcosm of the high inflation vortex in the United States. In today's unstable consumption environment, this chill is still spreading. Which big seller will be the next to be broken?

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Footwear

Shoes for Crews