The parade of retail bankruptcies continued on Friday as women’s footwear chain Aerosoles filed Chapter 11 with a plan to focus on its wholesale and e-commerce channels.
The New Jersey-based company said a critical part of its restructuring would be “a significant reduction in the number of retail stores it operates in an effort to realign the business with the changing marketplace environment.”
Aerosoles currently operates more than 300 stores around the world, 78 of them in the U.S. after closures in 2016. Reuters quoted sources as saying it would move forward with about a quarter of its U.S. locations.
“This restructuring will enable Aerosoles to become a stronger, more vibrant brand, and position the company for future growth,” interim CEO Denise Incandela said in a news release, adding that “by improving our financial structure and right-sizing our retail footprint, we will be able to refocus our business efforts on the execution of our turnaround strategy.”
As Reuters reports, at least a dozen retailers selling apparel, electronics and discount shoes have filed for bankruptcy this year to slash their store count and better compete with e-commerce giants such as Amazon. The companies include mall chains Payless ShoeSource, Rue21, Gymboree, and True Religion.
In court papers, Aerosoles attributed its financial difficulties to “declining mall traffic, a highly promotional and competitive retail environment, and a shift in customer demand and preference for online shopping.”
“In addition to battling e-commerce, Aerosoles has also been challenged in luring shoppers to its stores and website with products that stand out from its competitors, as more of them now offer affordable, comfortable shoes,” Reuters said.
Aerosoles, which plans to emerge from bankruptcy in four months, said “the reorganized business will focus its efforts on the e-commerce, wholesale and international businesses that have continued to gain strength in recent years.”
Reuters reported in July that the company was considering strategic options including a sale or debt restructuring. The Chapter 11 petition listed assets of $10 million to $50 million and liabilities of $100 million to $500 million.