The future of collapsed footwear retailer Steve Madden could be decided in as little as seven days.
Administrators for the label’s Australian arm are confident a private investor or existing shoe retailer will move to purchase the brand by the end of August.
Ferrier Hodgson partner James Stewart, who was voluntarily appointed to oversee its administration late last month, said the business had run aground as a result of the global credit crunch.
“The business reached a point where it was short of working capital [due] to difficult economic conditions,” Stewart said. “The poor health of the managing director was a major distraction to the business.”
Steve Madden (Australia) operates 35 stores across the country including nine stand-alone sites, eight clearance centres and concessions within department store Myer. The company, which has continued to trade since the appointment of administrators, had an annual turnover of $17 million last year.
National Footwear Retailers Association chairman Peter Parkinson said this was a challenging climate for shoe chains. Figgins Holdings was forced to shut down 43 Shoo Biz stores across Australia earlier this year, in addition to selling its Florsheim label and rebranding its high-end Evelyn Miles boutiques to Midas stores.
Parkinson admitted the financial crisis would “shake” major players in the sector as access to credit and consumer confidence soured.
“There is a lot of competition among some sections of the industry more than others,” he said. “When things get tight, people gravitate towards either price or comfort and quality – stores [operating] in between will feel the impact.”
IBISWorld industry analyst Raghu Rajakumar said aggressive discounting among major footwear retailers and department stores had also affected sales. Revenue was expected to fall by 1.4 per cent over 2009/10.
“The challenge for footwear retailers is to keep the proverbial foot in the door and maintain a viable share of the market,” he said. “This is proving a difficult thing to do because the change in consumers’ mindsets, combined with tighter access to business funding, is seeing many struggle to maintain working capital.
“A lack of working capital was one of the major problems Steve Madden faced.” Steve Madden administrators expect all entitlements for the brand’s 200 employees to be secure.
Stewart said a suitable investor would continue to drive the brand’s presence in the Australian market. “We are looking for either existing shoe retailers or investors with solid retail experience [and] an expedient sale with a clear outcome by the end of August if not earlier,” he said.