Commentary

On A Tortuous Path Lately, Rockport Files For Bankruptcy Protection

Rockport Group, which markets Aravon and Dunham shoes as well as its own eponymous brand and its Cobb Hill collection, filed for Chapter 11 bankruptcy protection in Delaware yesterday as it prepares to sell its assets to private equity group Charlesbank — unless another buyer shows up with a better offer. It evidently hopes not.

“The transaction with Charlesbank will ensure the continuation of Rockport’s deep heritage and great brands, and provides a clear path forward for the Company by focusing on its global wholesale, independent and e-commerce operations. With the alignment of its operations and the financial strength, consumer expertise and support of Charlesbank, Rockport will be better positioned in today’s evolving retail landscape,” the company maintains in a release announcing the action.

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“The agreement with Charlesbank includes Rockport’s global wholesale assets, e-commerce platform and retail operations in Asia and Europe. In addition, Charlesbank will have the opportunity to evaluate Rockport’s North American retail operations and determine whether it will pursue an acquisition of certain of these locations. Rockport is seeking court authorization to close the North American retail stores that are not acquired by Charlesbank or another party,” Marianne Wilson writes for Chain Store Age.

“Rockport is the latest shoe company to file for bankruptcy, following Walking Co., Payless ShoeSource Inc., Nine West Holdings Inc., Shiekh Shoes, Aerosoles Inc. and Pinktoe Tarantula Ltd., which owned four Charlotte Olympia footwear stores in the U.S.,” Becky Yerak points out for the Wall Street Journal.

It has been quite the trek for the Newton, Mass.-based company. 

Positioning its footwear somewhere between fancy dress shoes and sneakers, the father/son duo of Saul and Bruce Katz founded Rockport in 1971 in Marlborough, Mass. with $15,000 in capital.

“Rockport is credited with inventing the walking shoe and popularizing walking as a form of exercise and a healthy alternative to running. Under the leadership of Bruce Katz, the driving force behind the walking shoe, Rockport invested heavily in design and ‘spent lavishly on advertising and marketing to create a strong brand name and carve out a market niche,’ according to The New York Times. Rockport also invested in research into the biomechanics of walking to design its shoes,” its Wikipedia entry discloses

In 1986, the company was sold to the British athletic footwear company Reebok. 

“Adidas swallowed up Rockport as part of its Reebok acquisition in early 2006, but the fit was never quite right for the German giant. A spinoff to a New Balance affiliate in 2015 promised a new era. Rockport moved off Reebok’s old Canton campus and into new Newton digs the following year,” Jon Chesto reports for the Boston Globe.
 
“But the corporate divorce, it turned out, was a complicated one. Rockport couldn’t separate itself from Adidas’ logistics network until last November…,” Chesto continues. “Setting up a new distribution network proved far more costly than expected for Rockport as a smaller, independent company. Complicating matters: Three factories run by foreign vendors closed in 2016, disrupting Rockport’s supply chain and delaying numerous shipments. Then Rockport fought with a key distribution partner. More unforeseen expenses.”
In fact, “separating from Adidas turned out to be ‘more complex,’ ‘meaningfully longer’ and ‘significantly more expensive than planned,’ interim Chief Financial Officer Paul Kosturos said in a court filing,” Nathan Bomey writes for USA Today.

“Throughout the [bankruptcy] process, customers can continue to shop the brand at department and specialty stores globally, as well as through its e-commerce platform and select retail locations. To do so, Rockport has obtained $20 million in new-money debtor-in-possession financing from existing noteholders in addition to its existing $60 million credit facility. It has also filed a series of first-day motions seeking authorization to pay employee wages and benefits, honor customer commitments and manage day-to-day operations through the sale process,” Barbara Schneider-Levy reports for FN.

That’s good news for Rockport loyalists — and it has quite a few. Its $99.95 Big Bucks Margin, for example, was the most popular dress shoe for a “guy looking to dress up his jeans,” at Zappos in April 2017, according to Business Insider’s “Insider Picks” team.

“Life is an incredible, rich journey filled with adventures and people to share them with,” the Rockport’s origins story concludes. “Luckily, we've got just the shoes for the road ahead.”

If all goes according to Rockport’s plan, they should make make that “Fortunately, we’…”

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