Troubled Vancouver e-commerce player was once a rising star
By Glen Korstrom | Jan. 27, 2017, 12:09 p.m.
Vancouver-based online shoe retailer Shoes.com announced January 27, without notice, that it would halt operations immediately.
The company has taken all three of its e-commerce properties – Shoes.com, OnlineShoes.com and ShoeME.ca – offline. It also closed the doors on its two Shoes.com brick-and-mortar stores, which are in Vancouver and Toronto.
It made its approximately 200 employees aware of the decision early on January 27, and the company said in a release that it will compensate the employees through to the end of the month.
Shoes.com is working with its secured lenders to determine the process to liquidate assets and currently intends to assign some or all of the group companies into bankruptcy.
A limited group of employees will stay on through the next few weeks as the company winds down all operations.
Shoes.com has its roots in CEO Roger Hardy's acquisition of Vancouver’s Shoeme.ca and Seattle’s OnlineShoes.com in mid-2014. Bought simultaneously, the companies were run under one umbrella. Hardy financed those acquisitions from money generated by selling Coastal Contacts to French eyewear giant Essilor for $430 million. He founded Coastal Contacts in 2000 and later took the venture public on Nasdaq.
In December 2014, Hardy bought Shoes.com, which was then the online division of St. Louis-based Brown Shoe Co. (NYSE:BWS).
Hardy then merged all the brands in 2015.
His penchant for acquisitions was also on display when Shoes.com bought socks manufacturer Richer Poorer in late 2015.
Hardy did not immediately return a phone call from Business in Vancouver.
BIV reported on layoffs, lawsuits and delayed bricks-and-mortar store openings at Shoes.com in November.
Walmart (NYSE:WMT) announced January 5 that it had shelled out US$70 million to buy Shoebuy.com – a move that many interpreted as a shot across the bow of Amazon.com (Nasdaq:AMZN), which operates the shoe e-commerce division Zappos.com.
Zappos stopped shipping to Canada in 2011 but has a foothold on a sizable chunk of the U.S. online shoe market.
That is likely a similar size to Shoes.com, given that Hardy, told BIV in mid-2015 that his company had an annual revenue run rate of $320 million and that he aimed for that rate to rise to $1 billion by 2020.
“Given the delayed nature of e-commerce, the costs of fulfillment – for the retailer, as well as for the consumer – and the prevalence of physical stores, Shoes.com and Shoeme.ca were playing in an already crowded space,” retail analyst and Retail Insider Media owner Craig Patterson told BIV when he was informed of the news.
“Without knowing their financials, I’m curious if there was an increase in costs associated with corporate expansion.”