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American discount footwear chain Payless has filed for Chapter 11 protection in St Louis, Missouri and is to close around 400 stores across the U.S. and abroad.
Founded in 1956, Payless, the largest specialty family-footwear retailer in the U.S. until now, is a privately held company owned by Blum Capital and Golden Gate Capita. Struggling with the rise in e-commerce, the Company said it is seeking to restructure and will be immediately closing around 400 underperforming stores in the U.S., Canada and Puerto Rico. Reported to be heavily in debt (estimated at US$665 million) prior to the bankruptcy, the company has seen its credit rating downgraded by Moody’s. Its logistics (CBL) and supply chain (DAL) entities are also said to be included in the company’s restructuring plan.
“This is a difficult but necessary decision driven by the continued challenges of the retail environment, which will only intensify,” said Paul Jones, CEO, Payless, in a statement. “We will build a stronger Payless for our customers, vendors and suppliers, associates, business partners and other stakeholders through this process”, he added. The company says it will use Chapter 11 to "strengthen its balance," restructure debt, invest in potential expansion areas, and to "optimise its store footprint."
Employing over 22,000 people in over 4,000 stores in 30 different countries, Payless joins a list of American companies in the fashion/footwear segment to have announced financial difficulties in recent times, including K-Mart, Sears, Aerospostale, American Apparel and JC Penney. The company aims to reduce its debt by almost 50%, lower the amount of interest in repayments and line up funds.