The discount shoe retailer Payless ShoeSource is set to close all of its stores when its files for bankruptcy later this month. Veuer’s Mercer Morrison has the story.
Payless ShoeSource filed for Chapter 11 bankruptcy protection late Monday with plans to close all of its stores in the U.S. and Canada.
The widely anticipated move marks the Topeka, Kansas-based retailer’s second bankruptcy filing in about as many years.
The first time, the company arranged a deal to cut debts accumulated through a private equity deal, close struggling stores and emerge from bankruptcy in 2017 with a chance to survive.
This time, the company is entering bankruptcy with plans to close all of its about 2,500 locations in the U.S. and Canada. The company has already ended online sales.
Liquidation sales were set to begin as soon as Sunday. Some stores will be closed by the end of March, while “many” will remain open through the end of May, Payless said late Monday.
“The challenges facing retailers today are well documented, and unfortunately Payless emerged from its prior reorganization ill-equipped to survive in today’s retail environment,” Payless chief restructuring officer Stephen Marotta said in a statement. “The prior proceedings left the company with too much remaining debt, too large a store footprint and a yet-to-be realized systems and corporate overhead structure consolidation.”
The retailer is expected to honor gift cards and store credit through March 11.
Payless locations in about three dozen other countries, including 420 company-owned stores and 370 international franchisee stores, will remain open.
The company’s collapse comes amid a wave of challenges for mall retailers, including declining foot traffic, digital competition and the changing tastes of shoppers.
Payless, which closed about 900 stores during its first bankruptcy, had more than 3,500 remaining in 40 countries and about 18,000 employees as of September.
The company’s bankruptcy petition cited debts and assets of between $500 million and $1 billion.
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Payless listed several Chinese companies, including footwear suppliers, among its largest unsecured creditors.
Founded in 1956, Payless helped pioneer the retailing strategy of enabling consumers to self-select their buying choices.
But in recent years, the chain had a limited digital presence, prices that had crept too high over time and nimble physical competition.
After its first bankruptcy, the company had planned to cut prices and help other retailers service their shoe inventory or sales while adopting the treasure-hunt nature of successful retailers like T.J. Maxx and Marshalls.
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