By Jessica DiNapoli
NEW YORK (Reuters) - U.S. sneaker seller Shiekh Shoes LLC is searching for financing to avoid bankruptcy, its owner Shiekh Ellahi said on Friday, as increasing online competition has caused major upheaval for brick-and-mortar retail chains.
"We are struggling because of the situation with the banks and suppliers," said Ellahi, who in 1991 founded the shoewear retailer that caters to so-called "sneakerheads" who collect funky and rare sneakers.
Shiekh Shoes, which also sells streetwear apparel, has about 120 stores across 10 states stretching from California to Tennessee. If Shiekh Shoes' attempts to find financing fail and the company files for bankruptcy, it would allow the retailer to exit its unprofitable leases, Shiekh said.
Shiekh Shoes is talking to four to five banks about funding to avoid filing for bankruptcy, he said, adding that he is not in default with any creditors or landlords.
Shiekh Shoes renovated stores to meet demands from suppliers, who want their premium shoes displayed only in new, high-end environments, Shiekh said. Shiekh Shoes sells sneakers from Nike Inc (N:NKE), Puma SE (DE:PUMG) and Adidas AG (DE:ADSGn), among others.
Shiekh said he has remodeled 61 stores over the last three years, and must do similar work on the rest of the retail footprint. He also hopes to be able to secure breaks on rent payments outside of bankruptcy.
The company has retained legal counsel to help work on a bankruptcy filing in case efforts to avoid it do not pan out. Shiekh said the outcome of his attempts will be apparent later this month.
Shiekh Shoes acquired streetwear e-commerce site Karmaloop last year. Karmaloop filed for bankruptcy in 2015, and had been eyed as an acquisition by hip-hop artists and producers Kanye West and Damon Dash.
Shiekh Shoes secured a $20 million commitment from Alabama bank AloStar Bank of Commerce earlier this year.
More than a dozen retailers have filed for bankruptcy this year, with many using the process to exit unprofitable leases.
Discount shoe retailer Payless Holdings LLC and comfort shoewear company Aerosoles both filed for bankruptcy this year. Payless emerged this summer after closing roughly 700 mall-based stores. It still has about 3,200.
(This story corrects number of remodeled stores to 61 from 30, paragraph 6)