Shoe Enough

Troubled shoe retailer Footstar Inc. (West Nyack, N.Y.) has filed for bankruptcy protection.

The company said it would conduct “business as usual” as it undergoes “a financial and operational restructuring.” To support its operations during the restructuring, the company said it secured $300 million debtor-in-possession financing.

In a statement, Footstar said it was hurt by the closing of about 600 Kmart stores, where its Meldisco subsidiary (Mahwah, N.J.) operated shoe departments for more than 30 years, and the challenges associated with its acquisition of the Just For Feet chain for $72 million in 2000.

Added to its woes are accounting discrepancies the company found in the fall, leading to an investigation by the Securities and Exchange Commission. Footstar, which has been working on restating its financial results for 1997 through mid-2002, said Wednesday that the work is “substantially complete.” In September, Footstar announced it had underestimated its accounts-payable obligations by $46.1 million during that time, and ousted Mickey Robinson, its chairman and ceo, “for cause.”

The company has delayed filing its restated financials at least five times, and its stock was delisted by the New York Stock Exchange in January because of those delays.

“With today's filing, we are proceeding on a difficult but necessary path to address Footstar's financial needs,” said Dale Hilpert, who was named chairman and ceo in January. “Our objective is to use the Chapter 11 process to create a financially stable company. . . Toward this end, we are taking a hard look at our business and all of our alternatives and expect to refocus our resources on a more profitable business base.”

At the end of January, Footstar had 431 Footaction stores, 88 Just For Feet superstores, 2504 Meldisco licensed footwear departments, and 39 Shoe Zone stores. The company also distributes its Thom McAn brand of shoes through Kmart, Wal-Mart and Shoe Zone stores.