Payless Files for Bankruptcy

Footwear retailer Payless ShoeSource has filed for bankruptcy in the U.S. and plans to close nearly 400 stores to facilitate the restructuring necessary for the company’s long-term success.

April 6, 2018

Retailer will aim to reduce its debt load by almost 50 percent.

The company’s North American entities, as well as two foreign Hong Kong-based entities involved in logistics (CBL) and supply chain (DAL), are included in the restructuring plan. However, Payless will continue to operate its business in the ordinary course in terms of its customers, vendors, partners and employees.

Furthermore, the shoe retailer will aim to utilize the Chapter 11 bankruptcy process to strengthen its balance sheet and restructure its debt load, with the aim of reducing it by almost 50 percent; invest in specific areas that will provide sustainable growth, such as omni-channel expansion, product inventory initiatives and international expansion; and optimize its store footprint by modifying current real estate leases and evaluating additional store closures.

“We are confident that this process

will also enable us to leverage Payless’s existing strengths to succeed,” says Paul Jones, chief executive officer, Payless. “These strengths include our ability to produce significant free cash flow and, even last year, flat EBITDA despite unprecedented challenges and in contrast to many retailers; our portfolio of strong proprietary brands, along with unique licensing agreements with premier brands and partners; our best-in-class design and sourcing capabilities that enable the company to offer customers high quality products at a significant discount to peers; our strong and growing Latin American business, and a lean and scalable franchise model for other markets.”

The fate of Payless follows in the footsteps of other brick-and-mortar retailers, including RadioShack, American Apparel, Aeropostale and Sports Authority, all of whom have also filed for bankruptcy in recent years.

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