SOLE COLLAPSE
Popular sneaker chain files for bankruptcy becoming latest casualty of ongoing retail bloodbath
Another beloved footwear chain is struggling for similar reasons
A POPULAR sneaker retail chain known for selling high-end brands has officially filed for Chapter 11 bankruptcy protection last week.
Soleply's bankruptcy filing comes as endless other brick-and-mortar stores struggle to stay afloat in the modern retail landscape.
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To the dismay of many sneaker enthusiasts, Soleply filed for Chapter 11 bankruptcy in New Jersey on Friday.
The company has up to $10 million in debts, per court filings, with the bankruptcy providing the opportunity to continue its operations while reorganizing its debts.
The filing also revealed that Soleply is looking to exit multiple leases, including for two stores that have not yet opened.
Multiple landlords have threatened to take legal action against the retailer for ending the leases, seeking compensation for unpaid rent, lost income, and potential contract penalties.
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The upscale sneaker chain formerly operated six stores across Delaware, Connecticut, Maryland, Rhode Island, New Jersey, and Pennsylvania.
How does bankruptcy work?
Bankruptcy is a specific legal process that helps companies eliminate debt they can't repay.
The process allows businesses to start fresh and gain access to new credit.
Supervised by federal courts, bankruptcies allow a company to sell off its assets more easily to pay off creditors, according to Investopedia.
Chapter 11, a common process for companies, is used to restructure a business with the goal of remaining open - even if it means selling off most of the company's properties.
Chapter 7, on the other hand, sells all of a company's assets, putting it out of business.
Chapter 15, alternatively, allows for collaboration between American and foreign courts to conduct bankruptcy proceedings with "parties of interest involving more than one country," per the United States Courts.
The retailer was forced to shutter four of the locations and focus its efforts on its most profitable store in Cherry Hill, New Jersey, a suburb of Philadelphia.
Founded in 2021, Soleply is a beloved sneaker retailer specializing in high-end, limited-edition sneakers and apparel.
The chain sells sneakers from sought after brands such as Kanye West's Yeezy, Asics, Nike, Jordan, and New Balance.
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Sneakerheads frequently visit from neighboring states to shop at Soleply’s stores.
However, the company's bankruptcy filing indicated that yet another Soleply store may soon be vacated, leaving fans worried the stores may permanently shutter.
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Soleply's Chapter 11 filing is the latest in the wave of bankruptcy filings in the retail sector.
Major retail chains that have filed in the past few months include Big Lots, Joann, Party City, Express, and Forever 21.
A handful of factors are to blame, including supply chain disruptions, changing consumer behavior, the rise of e-commerce, high operational costs, residual challenges stemming from the pandemic, and economic pressures.
US braces for '45,000 store closures'
Some 45,000 bricks-and-mortar stores could close in the next five years, experts have warned.
Several major retailers have announced store closures or gone out of business altogether in recent years.
In 2023, chains such as Foot Locker announced plans to close up to 400 outlets by 2026.
While, other well-known retailers like Tuesday Morning and Mitchell Gold + Bob Williams filed for bankruptcy in 2023.
Bed Bath & Beyond has closed all of its brick-and-mortar stores and is now an online-only retailer.
The most affected retailers have been clothing, consumer electronics, sporting goods, hobby, book, music, and home furnishing stores since the start of 2019.
UBS has predicted the total number of retail stores will drop by 45k from 958k to 913k.
Despite that, the report says that certain stores should thrive while others decline.
It said retailers such as Walmart, Costco, Home Depot, and Target, could be among the winners.
Alongside numerous bankruptcy filings, the retail industry has seen unprecedented levels of store closures.
Retail closures are predicted to impact around 15,000 brick and mortar stores in 2025, a stark increase from the 7,325 last year, per data from Coresight Research, the leading research and advisory firm specializing in retail and technology.
One of the companies expected to take a hit is Soleply competitor Foot Locker, which announced plans to shutter 400 of its locations by 2026.
The two sneaker chains have been negatively impacted by inflation.
As a result, retail prices have skyrocketed while shoppers are limiting their discretionary spending.
Making matters worse is the high cost to run bricks-and-mortar stores, which now struggle to compete with e-commerce giants like Amazon, Shein, and Temu.
Inflation has also hurt the restaurant industry.
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For example, a beloved Mexican chain had confirmed it will close 70 locations just weeks after suffering a fatal blow.
Plus, Red Lobster recently emerged from bankruptcy, and the CEO spoke out on three reasons why it’s better than rivals.
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