Shoe City, a sneaker and streetwear retailer based in Baltimore, has filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Maryland. The company, which has 39 stores in Maryland, Virginia and Washington, D.C., has now begun going out of business and lease sales at all locations.

 According to court documents, Shoe City has liabilities and assets of $10 million to $50 million, and is unable to pay $16 million of unsecured outstanding debt. The company also owes an additional $3.1 million on a $10 million line of credit with Truist Bank. 

Shoe City had been a family-owned business since its inception as Eileen Shoes in 1949. The company rebranded to Shoe City in 1980. But as a result of years of falling sales and net income, Stanley Mastil, the company’s chief restructuring officer, wrote in a first-day declaration that “unfortunately, after 74 years in business, the Shoe City legacy has come to an end.” 

 The retailer stopped receiving the same level of sneaker releases and high-end goods from key vendors, which are “critical to this industry.” In fiscal year 2020, the company had an operating loss of about $280,000 and in fiscal year 2021, that loss grew to $1.76 million, “which had a significant negative impact on the Debtor’s financial position and liquidity.”

 In May 2022, Arklyz Group, the parent company of rival retailer The Athlete’s Foot, agreed to acquire Shoe City. But Arklyz failed to close on the deal and it fell through. Mastil said in the court filing that “the proposed deal was full of synergies between two companies committed to their respective communities, loyal customers, and philanthropic initiatives.” 

 Shoe City’s troubles worsened in the current fiscal year, when comparable store sales decreased by about $8.5 million from prior years. During the current fiscal year, sales continued to decrease by almost $5 million through January.

Sources: https://www.retaildive.com/news/shoe-city-ycmc-files-bankruptcy-chapter-11/647115/