BY Fraser Tennant
As the latest retail chain to shut up shop in the US, shoe retailer Payless ShoeSource is to close its 2500 stores in the US after filing for Chapter 11 bankruptcy – for the second, and likely final, time.
The company first filed for Chapter 11 bankruptcy in April 2017, closing approximately 400 stores.
In addition to its Chapter 11 filing, Payless ShoeSource will also be seeking protection from creditors under the Companies' Creditors Arrangement Act (CCAA) in the Ontario Superior Court of Justice.
Founded in 1956, Payless ShoeSource serves millions of customers through its extensive global network spanning 36 countries worldwide. The firm has 420 stores in Latin America, the US Virgin Islands, Guam and Saipan, as well as 370 international franchisee stores across the Middle East, India, Indonesia, Indochina, Philippines and Africa.
“The challenges facing retailers today are well documented and, unfortunately, we emerged from a prior reorganisation ill-equipped to survive in today’s retail environment,” said Stephen Marotta, chief restructuring officer at Payless ShoeSource. “The company has been left with too much remaining debt, too large a store footprint and a yet-to-be realised systems and corporate overhead structure consolidation. As a consequence, we must wind down our North American retail operations under Chapter 11 and the CCAA.”
The company has said that it expects store closings will begin at the end of March – with many stores remaining open until the end of May – as it conducts liquidation sales in the US and Canada. E-commerce operations have also been wound down. However, profitable stores throughout Latin America, which are not part of the Chapter 11 filing, and international franchisees’ stores will continue to operate as usual. “As we move through the process, we will work to minimise the impact on our employees, customers, vendors and other stakeholders,” added Mr Marotta.
Additionally, authorisation is being sought from the US Bankruptcy Court for customer gift cards and store credit to be honoured until 11 March 2019, and to allow returns and exchanges of applicable non-final sale purchases made prior to 17 February 2019, until 1 March 2019. A similar request will be made in the Canadian Court. However, rewards programmes and outstanding merchandise coupons in North America have been discontinued with immediate effect.
"I would like to express our deep appreciation for the hard work of our dedicated employees and their commitment to customers, who have shown us tremendous loyalty for more than 60 years,” concluded Mr Marotta.