Multichannel Merchant quotes Chris Kampe, Tully & Holland's Retail Group Managing Director, regarding Bakers Footwear Filing for Bankruptcy

February 13, 2013 - Bakers Footwear Group Inc. has filed for bankruptcy and is liquidating its remaining 56 mall-based locations throughout the country according to a release on

Last October, the St. Louis women's shoe company filed for bankruptcy protection. The shoe company fell 5.9% compared to 2011 squeezing the company's cash and causing it to default on a loan. Financial troubles are so bad according to Bloomberg Businessweek, that Bakers Footwear listed assets of $41.9 million but a debt of $59.5 million.

According to Chris Kampe, managing director with Massachusetts-based investment banking company Tully & Holland Inc., Bakers have had operating losses for at least four years. "Even when it was profitable, when it went public" it wasn't profitable as it should have been, said Kampe.

Kampe said looking at companies in the shoe business most will have a gross profit margin of roughly 40%. Bakers had 25%. "Twenty-five percent is not enough of a margin to be successful. It's unusual because they were selling private label products. You should be able to do better if you are selling private label product, said Kampe. "Their margins were too low and operating expenses were too high.

The last year Bakers had an operating profit was 2005, according to Kampe. When they were profitable, he said, their gross profit margin was 30%. Kampe said one of the factors is they are mall based which could be more expensive. "My sense is DSW has successfully taken a pretty big piece of footwear purchases, said Kampe. "The customer wants branded products."

Kampe said they have been closing stores and they sold some off in an attempt to raise some cash to find their operations and ultimately the lender pulled the plug. "It's a sad end, said Kampe.