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U.S. sneaker seller Shiekh Shoes LLC is searching for financing to avoid bankruptcy, its owner Shiekh Ellahi said on Friday, as increasing online competition has caused major upheaval for brick-and-mortar retail chains, Reuters reported.  “We are struggling because of the situation with the banks and suppliers,” said Ellahi, who in 1991 founded the shoewear retailer that caters to so-called “sneakerheads” who collect funky and rare sneakers. Shiekh Shoes, which also sells streetwear apparel, has about 120 stores across 10 states stretching from California to Tennessee. If Shiekh Shoes’ attempts to find financing fail and the company files for bankruptcy, it would allow the retailer to exit its unprofitable leases, Shiekh said. Shiekh Shoes is talking to four to five banks about funding to avoid filing for bankruptcy, he said, adding that he is not in default with any creditors or landlords.

Brick-and-mortar retail chains, known for sprawling stores that stock a bit of everything, are trying to lift sagging sales using a different strategy: cozier spaces that sell very little of anything, the New York Times reported. Showrooms — a retail model popular with bridal designers, car dealers and, recently, online apparel start-ups — are now inspiring mass-market heavyweights like Nordstrom and Urban Outfitters. In intimate salons, some the size of a cafe, shoppers can examine a limited selection of merchandise and place orders for products to be delivered or collected later. The customer service is often luxurious, but so is the time commitment for shoppers. The sector is desperate to evolve after a brutal year of bankruptcies (Toys “R” Us, Payless Shoe Source, The Limited and more) and store closings (J. C. Penney, for example, plans to shutter up to 14 percent of its stores this year). “People don’t have to go to stores anymore; they have to want to go,” said Lee Peterson, an executive vice president at WD Partners, a strategy, design and architecture firm. “And that goes a long way when thinking about what retail has to become.” Read more. 

Find out how overleveraged and poorly merchandised stores will continue to disappear in retail's accelerating evolution in this November ABI Journal article. 

Retail apocalypse? Experts will examine key issues in the current downturn, and how retailers might survive, during the "Dead Malls Walking" session at ABI's Winter Leadership Conference in Palm Springs, Calif., taking place Nov. 30-Dec. 2. Click here to register. 

Less than a month after announcing it would close up to 10 stores, a plus-sized women's clothing retailer has filed for bankruptcy, NJ.com reported. Fashion to Figure filed for chapter 11 protection on Monday in bankruptcy court in Newark, N.J., according to court papers. It has 23 stores in seven states, including three in New Jersey. Fashion to Figure's CEO Michael Kaplan told NYPost.com in October that the company made a mistake in expanding into malls too quickly at a time when the retail business was changing. Kaplan is the great-grandson of Lena Bryant, who rolled out the first plus-sized clothing with the founding of Lane Bryant.

Vitamin World Inc. has hired Gordon Brothers Retail Partners LLC to immediately start going-out-of-business sales at 124 stores in more than 30 states, WSJ Pro Bankruptcy reported today. The Holbrook, N.Y., retailer on Tuesday asked the U.S. Bankruptcy Court in Wilmington, Del., for permission to hire Gordon Brothers as its liquidation consultant and to approve a plan that would result in the closure of more than a third of its stores by the end of January, court documents show. When Vitamin World filed for chapter 11 bankruptcy in September, it had 334 stores and said at that time it had identified 51 stores it planned to close as part of its restructuring. Although it originally planned to reorganize its business, Vitamin World said in a court filing Tuesday that “unforeseen operational challenges and liquidity concerns” have caused it to now pursue a sale of “substantially all” of its assets. A hearing on the matter is scheduled for Nov. 21.

Toys ‘R’ Us, which filed for bankruptcy in September, is seeking court approval to pay $16 million in bonuses to its senior leadership, including Chief Executive David Brandon, WSJ Pro Bankruptcy reported. The company said in a bankruptcy court filing on Tuesday that it needs to pay the incentive bonuses to senior managers as the toy retailer gears up for its critical holiday season, where it generates 40 percent of its yearly net sales. “The stress on the debtors’ operations (and its senior management team) has been lasting and continues, as efforts continue to stabilize the world-wide enterprise and position the company to win during the all-important holiday season,” said the company’s lawyers at Kirkland & Ellis.

While Toys “R” Us world headquarters are in Wayne, N.J., the struggling retailer chose not to file for bankruptcy in nearby Newark, N.J. Instead, the toy company followed an increasing number of corporations — from Gymboree to a major coal company to a Pennsylvania fracking company — that are choosing to file for bankruptcy in Richmond, Va., according to a New York Times analysis. In recent years, Richmond has become the destination wedding spot for failed companies. The bankruptcy court there offers several features attractive to the executives, bankers and lawyers trying to get an edge in the proceedings. First, Richmond’s bankruptcy court offers a so-called rocket docket that moves cases along swiftly. Second, the legal record in that court district includes precedents favorable to companies, like making it easier to walk away from union contracts. But perhaps one of the biggest draws, according to bankruptcy lawyers and academics, is the hefty rates lawyers are able to charge there. The New York law firm representing Toys “R” Us, Kirkland & Ellis, told the judge that its lawyers were charging as much as $1,745 an hour. That is 25 percent more than the average highest rate in 10 of the largest bankruptcies this year, according an analysis by the New York Times.

Hasbro Inc. and Mattel Inc. combined would result in a toy company with a large but hardly dominant share in a highly fragmented industry, according to a commentary in today’s Wall Street Journal. The two companies, which recently engaged in talks about a possible tie-up, would control just over one-third of the U.S. market for traditional toys and games, according to Euromonitor International Ltd. On a global scale, they would control 22 percent of overall sales. With a low barrier to entry, the toy industry is populated with hundreds of inventors and small firms seeking to create the next hit. Nevertheless, Hasbro buying Mattel would have a significant impact on the sector. According to toy consultant Richard Gottlieb, inventors would have one less potential buyer of their ideas. Entertainment companies like Walt Disney Co. would no longer be able to play the two biggest companies off each other to extract the best terms on licensing deals. Retailers would face a supplier with much greater sway. “It’s highly destabilizing to an industry to have such powerful and prominent players in the industry having this kind of disruptive situation,” Gottlieb said. “If you’re an inventor, licensor or retailer, this is a concern.”