News spoke with restructuring expert Michael Appel of Appel Associates LLC to get his read on retail and the shoe industry against the backdrop of tariffs and what to expect in 2026.
Footwear News: It has been a roller coaster year for fashion brands and retailers dealing with Trump’s reciprocal tariffs and tariff uncertainty for most of 2025. What’s your thinking on the impact on brands and retailers as we look to 2026?
Michael Appel: I’m certainly expecting stress. I’m expecting more bankruptcies and restructurings on the vendor end than on the retailer end because retail bankruptcies are usually the result of too much leverage and poor management.
FN: How should the footwear industry plan for next year?
MA: The problem everyone is facing is uncertainty. If there’s certainty, good or bad, at least you know [whatever] this is going to be for the next year and one can plan accordingly. But since we have an administration that continually changes its mind about who or what is going to be subject to tariffs — and at what level those duties are going to be as well as when those rates will take effect — until that’s settled I think that creates a lot of anxiety.
FN: Is there any good news in all of this?
MA: People have to wear shoes, right? So as to whether one is a vendor or a retailer, you have to take a position on how much [inventory] you’re going to bring in and then how how are you going to price it.
FN: Looking back at 2025, we saw Freebird Stores, a boot retailer, and Soleply, a sneaker resale firm, both file for bankruptcy. Do you anticipate we’ll see more stress among the shoe vendors?
MA: I think businesses are going to get squeezed. If you are very reliant on one source of supply or one country of supply, then there’s going to be a lot of risk involved.
FN: You worked with Payless ShoeSource in the past. What lessons from that bankruptcy should retailers consider?
MA: You have to look at who their customer is. That customer was a low- to middle-income consumer. Were they going to buy the stuff online versus in the stores? They had a huge number of stores in good locations. But they had a change of management.
What we saw was they they changed their store merchandising footprint. They used to have everything out on the shelves, and then decided to go more upscale and they took some of those shelving units out. I think that hurt them.
It’s not that different with what happened with Claire’s this year. Claire’s had 2,750 stores. There’s no reason why they should be in trouble, but they also never recovered from when the founding family, the Schaefers, sold the business to private equity. Marla Schaefer and her sister — their father founded the firm — had the pulse on that tween customer. They knew what the trends were going to be and how to give the girls those trends. [After the sale], the chain lost their way and had [multiple] changes to management as well.
FN: In terms of big M&A news this year, Skechers just closed on its $9 billion deal to be taken private by Brazilian private equity firm 3G Capital. Good deal?
MA: I think the timing was impeccable. This is a great time to get out [of being public] and sell for a huge price. In addition, the existing management team will continue so that’s helpful — a big plus.
FN: Bringing it back to the sourcing landscape, is there less pressure on the footwear industries compared to other sectors since the sourcing is focused in Asia, and there aren’t many viable alternatives?
MA: Not necessarily. It all depends on where the tariff percentages are and [for how long]. There’s the [large] percentage of athletic footwear coming out of Vietnam, and that’s really China in many ways because a lot of the Vietnamese factories are owned by the Chinese.
FN: How do you see the tariff burden being distributed in the future?
MA: How much is the consumer willing to pay for something? It will depend on the brand, and then it’s going to come back to the vendor because the retailer will want to have the shoes, but they aren’t so good at sacrificing margin. This is going to be a push-and-pull as to how they’re going to look at it and what price points they need to hit. It’s going to go back to the manufacturer.
The private retailers might be willing to accept more of a contribution. The public ones are subject to the vagaries of Wall Street. They care about margins. The big brands aren’t going to go out of business. They also have some leverage with the retailers so they’re probably going to be okay. It’s really the small- and medium-sized firms that are going to get hurt the most.
