Swedish Footway Group, operator of specialized online stores, has applied for voluntary company reorganization. According to the company, the decision is based on “the very challenging conditions that the sports retail industry in Sweden and Norway has faced in recent months,” and an acute liquidity situation. During the reconstruction period, which usually lasts 3-6 months, operations will be conducted as usual with certain measures to strengthen the company’s liquidity and profitability going forward.
Excessively high inventory levels and aggressive pricing blamed
As to the cause of Footway Group’s current situation, excessively high inventory levels throughout the value chain and subsequent aggressive pricing and a high level of sales and campaigns in the market have been blamed. Footway Group adds: “The macroeconomic situation has created significantly less demand for products in the sports and retail industry, which in turn has resulted in high inventories in relation to demand.”
Historically, the company’s self-declared strength has been in data-driven purchasing. This proved to be a disadvantage after the pandemic and in the subsequent recession. Footway Group admits that the effects were, among other things, an excessive inventory and to some extent the wrong products in stock, which has had a strong negative impact on the company’s sales.
“Sports retail is a significant part of our business and when sales drop significantly together with increasing price pressure in the market, we are affected as an organization,” says Daniel Mühlbach, CEO.
“Suppliers will be affected” says CEO
He adds: “I find it deeply regrettable that we have ended up in this situation and I am aware that this will affect our suppliers and partners who have helped and supported us during these trying months. It is my ambition to lead the company through the reconstruction and emerge as a strong and viable partner going forward.”
The current year is expected to be a tough year for the industry, but there is a relatively optimistic view that the market will recover in 2024.
An application for company reorganization, Footway Group says, should be seen as an “extraordinary measure,” necessary to ensure the long-term sustainability of the business.
Under the company reorganization, Footway Group will be given the opportunity to implement measures to create a viable company in the long term and conditions to get through the challenging market situation. During the period, the company will continue to conduct e-commerce as usual through its 12 e-commerce stores.
Attorney Nils Åberg from Advokatfirman Carler has been proposed as the reorganizer.
