News / Ceva top creditor as shoe company goes bust, hit by e-commerce boom

Photo; Shoes for Crews

05/04/2024

The bankruptcy of a shoe company in the US has revealed an interesting snapshot of creditors, with freight and logistics accounting for 41% of the total debt.

Shoes for Crews, a non-slip workwear shoe company, filed for Chapter 11 on 1 April. According to the filing, it had been affected by “adverse macro-trends, including increased competition among online retailers that have less leveraged capital structures and greater economies of scale. These adversities were compounded by the disruption caused by Covid-19, which upended the hospitality industry and changed consumers’ and businesses’ spending behaviours virtually overnight. Recently, the debtors have faced extreme inflationary pressure on the costs of goods and labour.”

Covid was particularly challenging, as 95 of the top 100 US restaurant brands were customers of the company, which sold some 4m pairs of shoes a year.

But it is the creditor list that reveals most insight. The top creditor, owed $8.2m, is Ceva Logistics. Vandegrift, a New Jersey customs broker acquired by Maersk in 2019, is the fourth-largest creditor, owed some $1.5m. Other creditors include VCW Logistics, owed $91,255, Purolator ($63,560) and FedEx ($26,865), as well as Project44, owed $102,800.

Freight and logistics operators account for 41% of the total debt, owed just under $10m. Another 41% is owed to manufacturers, mostly in Hong Kong, while other creditors, marketing, IT, financial services and the like, account for the remaining $3.7m of debts.

Shoes for Crews blamed its financial problems on the “shift away from brick-and-mortar retail shopping, and the shift towards online retail shopping, which has led to increased competition from companies with an online presence”.

So one example, then, of e-commerce not working in freight’s favour, and a US brand being undermined by cheap e-commerce imports. Also interesting: freight accounts for the same amount of costs as the manufacturing itself, according to this snapshot.