The popular online retailer Karmaloop, who is known for its wide selection of affordable streetwear is struggling to avoid Chapter 11 bankruptcy.
According to NY Post, the Founder and CEO Greg Selkoe is currently talking to investors to pay off a part of Karmaloop’s debt and include an additional $10 Million in working capital to the company.Those talks with investors could fall apart and leave Karmaloop’s investor liable for as much as $100 Million in writedowns on debt and equity.
In 2011, Karmaloop raised its revenue up to $130 Million, which was a 80 percent jump from 2010, but then the company only made $120 Million in 2013, and less than a $100 Million last year. Also, the company has received harsh complaints from past customers, who have taken their frustrations to social media about undelivered packages.
“I am grinding extra hard to fix it!” Selkoe said in a Feb. 24 tweet. “Like make ur self sick kinda s- -t, no sleep etc But we gonna make it up to @Karmaloop is my fam & life.”
Even though Karmaloop “had the most selection and the best prices, but that created inventory obsolescence issues” as it struggled to sell all that it had, an insider has said. It has been also reported that Karmaloop had racked up $40 million in debt related to flopped side ventures by Selkoe including women’s line MissKL.
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