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Another Retail Shoe Drops: Nine West Declares Bankruptcy

Retail bankruptcies in 2018 are starting off similarly to the way 2017 finished up with wave after wave of prominent retailers filing for bankruptcy. The latest casualty of Retailmageddon is Nine West, the iconic seller of shoes who will no longer be selling footwear as their saga unfolds. Nine West joins Toys R Us, The Walking Company, Bon Ton and Claire’s this year, and it is only in April.

The Nine West story follows a similar path of many retail bankruptcy stories: declining traffic to the stores, excessive debt accumulated through private equity ownership and retail headwinds in the category (shoes in this instance). Nine West had an extra layer of misery added to their struggles, as it was also a prominent wholesaler to department store chains, many of whom are dealing with the same conditions.  And let’s blame Amazon.com as well: certainly their push into fashion and apparel, as well as ownership of Zappos, couldn’t have helped.

There is a potential path out for Nine West.  Ironically, it would be one that would have them depart from the footwear category.  In the mid-90’s, through a series of acquisitions, the company was once the dominant player in women’s footwear, sold through their own retail store network of branded stores (Nine West, Easy Spirit and others) as well as a dominant wholesaler to the department store ranks. The stores are all gone now (save perhaps an outlet or two) and the company has a $200 million offer from Authentic Brands Group to acquire the Nine West and Bandolino Brands. Through a $300 million loan, Nine West would remain an ongoing wholesale entity focused on what the company deems is a profitable and growing handbag, jewelry and jeanswear business.

And so, the ongoing debate continues. Are we facing a sea change of conditions that is threatening the future of brick and mortar retail? Or, is this simply the natural thinning of the herd, hitting poorly positioned and debt constrained retailers first? The answer is complicated and probably a little bit of both. While overall retail sales have been strong, buoyed by a robust economy, retailers still need to radically reshape their business models with fewer, more productive stores.

I expect I will be writing this story a few more times before it’s all said and done.

Neil Stern for Forbes

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