Payless CEO W. Paul Jones is retiring from the role he's held since 2012, the company said in press release Thursday.
The company has also successfully completed its financial restructuring and is emerging from Chapter 11 with about 3,500 stores and with "substantial liquidity" after eliminating more than $435 million in funded debt, according to the release.
Payless, founded in 1956 in Topeka, Kansas, disrupted shoe retail by introducing a no-frills, self-service approach that allowed for lower prices. The concept was a hit with customers, but it’s no longer a new one as the old-fashioned shoe salesperson who measures feet is now relegated to department stores (except Macy's, which is moving to self-service) and some specialty stores.
In his statement Thursday, Jones said the retailer has departed its Chapter 11 protection a "stronger and healthier enterprise."
"We have accomplished our goals of strengthening our balance sheet and restructuring our debt load, positioning Payless to create substantial value for our stakeholders and achieve long-term success," he said. "Our new owners believe wholeheartedly in the future of Payless, and I am confident that they will identify a new leader who will complement our outstanding and deeply committed management team, while sparking new ideas and approaches."
Next up is a turnaround, which will be executed without Jones at the helm. While the company searches for a new CEO, a new executive committee that includes CFO Michael Schwindle, COO Mike Vitelli, headed by board chairman Martin R. Wade, III will take over the chief executive duties.
"Payless remains poised to execute on the company's go-forward strategy, and is excited to continue to serve our loyal customers in North America and around the globe," Schwindle said in a statement. "I want to extend our collective thanks to Paul. We are grateful for his exemplary leadership and his contributions to the Company's strategic direction, which have helped build a strong foundation for future growth."
The shoe retailer was yet another victim of a leveraged buyout by private equity owners. Payless was bought in 2012 by private equity firms Blum Capital and Golden Gate after they and footwear company Wolverine took its parent company (Collective Brands) private. Wolverine now runs the Sperry Top-Sider, Stride Rite and Keds brands as a result of that deal.
Payless’s outstanding $520 million senior debt is quoted around 52 cents on the dollar, and its $145 million junior loan is quoted at some 16 cents on the dollar, sources told Reuters in January. Portions of those loans went to pay out a dividend to Blum Capital and Golden Gate, according to that report. Moody’s Investors Service in February cut the retailer’s rating and outlook, based on its declining performance and debt pressure.
Bankrupt apparel retailers The Limited, Wet Seal and J. Crew have also stumbled under the debt loads heaped upon them by their respective private equity owners. "These poor apparel chains end up one way or another in the hands of private equity — and in the end, there’s no company, no stores, no employees, and the private equity made money," Howard Davidowitz, chairman of New York City-based retail consulting and investment banking firm Davidowitz & Associates, told Retail Dive earlier this year. "Congratulations. That’s how it works."