The Venue Retail Group (VRG), the Swedish shoe retailing group that operates 115 stores in Sweden and Norway under the Accent, Morris and Rizzo banners, applied for insolvency proceedings and obtained it on Nov. 20. Further store closures and staff reductions are expected.

VRG, which was previously called Wedins, is also working on reducing the number of hours worked and a clearer presentation in stores, with different themes and concepts and an increased focus on its own brands, which carry higher gross margins.

The reasons for the company's financial problems, according to a press release, have been a lack of liquidity and adjustments that have cost too much money and gone too slowly. In particular, investments in the online business, which has shown strong sales growth, have not yet compensated for the sales lost from the shutting of many stores.

The company also says that “extensive conversion and alteration work” at Rizzo, the company's upmarket shoe retail chain, resulted in reduced sales of around 20 million Swedish kronor (€1.9m-$2.1m), and the process has been too slow.

The company had previously communicated that a credit agreement with its bankers would expire on Oct. 31 and that the company had a dialogue about extending it. In order for the bank to agree to extend the credit, requirements had been set for the company to apply for a corporate reorganization program, to carry out a new share issue of at least SEK 40 million (€3.8m-$4.3m) guaranteed by the company's main shareholders.

In its press release, the company said that major shareholders intend to fully guarantee the equity increase, which is set to be implemented during the summer of 2020. VRG said this will give it time to negotiate a long-term financial solution and “implement operational and organizational changes.”

The group still had an operating profit (Ebit) of SEK 29 million (€2.8m-$3.1m) on sales of SEK 850 million (€81.4m-$90.5m) in the 2018/19 financial year, down from SEK 886 million in the prior year.