Birkenstock Seller Files for Bankruptcy, Blames UGGs
Walking Co. Holdings Inc., seller of of Birkenstock, ABEO, Merrell and other brands of comfortable shoes, filed for bankruptcy in Delaware, blaming the loss of a key contract for UGG boots for its second restructuring. The company and its affiliates, FootSmart Inc. and sportswear apparel maker Big Dog USA Inc., also filed for bankruptcy in 2009, saying it needed to shed unprofitable stores after a rapid expansion from 2005 to 2008. At the end of 2016, the Walking Co.'s largest vendor, Deckers Outdoor Corp., terminated a contract to distribute UGGs, a critical loss that the retailer was unable to make up.
Total Retail's Take: This is an example of a retailer that's dependent upon a partnership with a leading brand, and if it loses that wholesale contract, it's difficult for the retailer to continue operating as is. Walking Co. is seeking to replace the unexpected revenue hit from losing the UGG contract, and as a mall-based retailer in today's challenging environment, it was unable to do so quickly enough. By restructuring through a second bankruptcy filing, and an expected increased dependence on direct-to-consumer sales, Walking Co. hopes to emerge from this process a stronger company moving forward.