The shoe retailer and e-commerce marketplace owner has defaulted on bonds valued at 592 million roubles ($7.7 million), 99 percent of which are held by Moscow-based Promsvyazbank (PSB).

“The group conducted active negotiations with PSB, but an agreement with the lender was not reached,” the company said in a statement.

OR Group (formerly known as Shoes of Russia) is a shoe retailer headquartered in Novosibirsk. The group operates stores under the brands Westfalika, Rossita, Lisette, Emilia Estra and Peshekhod, and also owns two shoe factories.

Last week, the group released its financial results for 2021, in which it reported revenues of 8.5 billion roubles ($110.9 million), a year-on-year decrease of 21 percent. Its total store count decreased by 10.6 percent, to 751.

OR Group-owned e-commerce marketplace platform Westfalika.ru, which sells the group’s own brands while acting as a third-party platform for other retailers, saw 2021 turnover reach 4.1 billion roubles ($53.4 million), 16.3 percent down on 2020.

OR Group has said it is “experiencing difficulties” due to a large debt load and the high cost of borrowing and is considering a debt restructuring arrangement.

The unstable situation in Russia’s consumer market due to the pandemic, combined with a slow recovery in demand, as well as rising costs for raw materials and logistics are also factors weighing on the group’s balance sheet.

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