Discount footwear chain Payless Shoesource is preparing to file for bankruptcy again after failing to revive its business amid crippling debt and competition from online rivals.
According to Reuters, Payless will close all of its approximately 2,300 stores in the U.S. and Puerto Rice when it files for bankruptcy later this month. It would likely be the largest-ever retailer liquidation by number of stores, The Wall Street Journal said.
“The move would make Payless one of the most high-profile victims of the string of bankruptcies that have hit the brick-and-mortar retail sector as more shopping is done online,” Reuters said.
The Topeka, Kan.-based company, which once billed itself as the “largest specialty family footwear retailer in the Western Hemisphere,” previously filed Chapter 11 in April 2017. As part of its reorganization plan, it closed nearly 400 stores and reduced its debt burden.
The private-equity buyout of Payless parent Collective Brands in 2012 had left the retailer with $838 million in debt going into bankruptcy. It emerged from Chapter 11 in August 2017 with about $400 million in loans and new ownership including hedge fund Alden Global Capital.
But as The New York Times reports, “bankruptcy has helped retailers shed their debt, but it has not helped many of them restructure their businesses and regain sales.”
“Keeping up with emerging fashion trends and creating attractive stores requires constant investment, which was a challenge for Payless,” the Times noted.
Toys “R” Us and The Bon-Ton Stores are among the retailers that shut their stores in liquidations in the past 12 months. Sears was recently saved from liquidation by its billionaire CEO, Eddie Lampert.
There is still a small chance a buyer could emerge for Payless after it files for bankruptcy, sources familiar with the matter told Reuters. In the meantime, the company is preparing to run going-out-of-business sales at its shops in the next week, one of the sources said.
A Payless spokesperson said the liquidation will not affect its international franchises and Latin American stores.