Payless ShoeSource Inc. is expected to close 2,500 U.S. stores upon filing for Chapter 11 bankruptcy protection on Monday. The Company had hoped to find a buyer for its real estate in order to stay afloat, but no deals were executed. Payless has about USD 470 Million in outstanding debt according to the filing.
According to Reuters, Payless said on Friday it would begin liquidation sales in its U.S. and Puerto Rico stores on February 17 as well as wind down e-commerce operations. Latin American stores will be unaffected by this process.
All stores are expected to remain open until at least the end of March, and the majority until May.
Payless bounced back from an initial bankruptcy filing in April 2017 when the Company ditched 700 stores and eliminated around USD 435 Million in debt. The comeback, however, was short-lived. Payless’ strategy to focus on in-store sales as opposed to e-commerce proved to be a fatal mistake.
"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, according to CNBC. The majority of the Company’s initial debt came from the sale of its former parent company, Collective Brands.
The Company said it plans to seek protection for its Canadian subsidiaries under the Companies’ Creditors Arrangement Act (CCAA) in the Ontario Superior Court of Justice.
Payless had a loss of USD 63 Million in 2018 and a loss of USD 4 Million in 2017.