Payless ShoeSource filed for bankruptcy protection on Monday evening, as the shoe retailer prepares to wind down its 2,500 U.S. stores.
preparing for a potentially imminent bankruptcy. In hopes of keeping some stores open, it had been seeking a buyer for swaths of its domestic real estate. Ultimately though, no deals would be struck.
The retailer, founded in in 1956 in Topeka, Kansas, began liquidation sales for its U.S. stores on Feb 17. It expects all stores to remain open until at least the end of March and the majority until May. It is also winding down its e-commerce operations.The liquidation will not impact its franchised or Latin American stores.
Payless first filed for bankruptcy protection in April 2017, eliminating nearly 700 stores and roughly $435 million in debt. Its emergence after four months was notable — many retailers, such as Toys R Us, have been unable to avoid complete financial collapse. Ultimately, though, Payless joined the scant number of survivors that, like Gymboree, boomeranged back into bankruptcy court.
The retail industry continues to be in a state of upheaval, as shoppers head online and demand more out of their shopping experience. The changes benefit giants like Walmart with scale or smaller, local shops — but leave those in the middle squeezed. Larger retailers have the resources to invest in supply chain and online capabilities, while local retailers can cater to regional tastes.
Payless, in particular, has faced competition from larger competitors like T.J. Max parent TJX Companies, which has a market-capitalization of $62 billion and shoe retailer DSW, which has a market capitalization of $2.2 billion.
“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,” said chief restructuring officer Stephen Marotta 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,” said Marotta.
Payless filed for bankruptcy protection with roughly $470 million in outstanding debt.
Much of its initial debt stemmed from the roughly $2 billion sale of its former parent, Collective Brands, to Wolverine World Wide and private-equity firms Blum and Golden Gate. Blum and Golden Gate held on to Payless, while Wolverine took control over Collective’s other brands, like Sperry Top-Sider, Stride Rite, and Keds.
It blamed its initial bankruptcy filing on “antiquated” inventory management and port strikes in the West Coast that delayed its shipments before the crucial Easter holidays, and ultimately let to a glut of off-season shoes. The retailer promised that, upon its reemergence, it would lean on its strong brand name in the U.S. and growth in Latin America. It was then the region’s largest specialty footwear retailer, according to court documents.
But Payless faced “unanticipated” delays from its suppliers in over the past two years that, once again, forced it to sell shoes it had to sell at deep-discount prices, the retailer stated in court documents.
Payless had a loss of $63 million in 2018 and a loss of $4 million in 2017.
Cash-tight, it was unable to invest in and deliver the fully “omni-channel” experience it had promised would combine online and brick-and-mortar shopping. It rolled out its unified shopping capabilities to only 200 stores, 8 percent of its US footprint.
from Just News Viral http://bit.ly/2XdKIKH
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