Payless liquidates in 2nd bankruptcy
UPDATE: February 19, 2019: Payless on Friday confirmed that liquidation sales at its roughly 2,500 store locations in the U.S. and Puerto Rico were to begin Feb. 17, and that the retailer is also "winding down" its e-commerce business. The shoe retailer filed for its second bankruptcy in two years Monday night, per a company press release. "We expect all stores to remain open until at least the end of March and the majority will remain open until May," a spokesperson told Retail Dive in an email. "This process does not affect the Company’s franchise operations or its Latin American stores, which remain open for business as usual."
Footwear retailer Payless ShoeSource is set to shutter all of its 2,300 or so locations as it enters its second bankruptcy in less than two years, unnamed sources told Reuters on Thursday.
The retailer has failed to find a buyer and plans to liquidate, according to the report. Payless didn't immediately return Retail Dive's request for comment.
The discount shoe company spent last year closing down some stores and cutting jobs at its headquarters after emerging from bankruptcy late in 2017. That plan was agreed to by lenders, which now largely own the company.
If this report proves true, Payless would contribute nearly half the store closures anticipated by retail think tank Coresight Research for the year.
Coresight this week said that 2019 is on pace to more or less match the 5,524 stores shuttered in the U.S. last year. That was a 32% improvement over 2017's rate, but so far this year closure announcements are already up 23% year over year — already at 2,187. A liquidation by Payless would more than double that.
While "retail apocalypse" has largely disappeared from most observers' vocabularies these days, the over-built retail landscape in the U.S. and ongoing financial difficulties at many players is driving a stark disintegration of brick and mortar. The number of bankruptcies filed by retailers in the first six weeks of the year has already reached one-third of last year's total, Coresight noted.
The financial difficulties at Payless also represent further evidence that private equity ownership often does retail turnarounds no favors. Payless is among the more than 15% of retailers acquired by private equity firms over the past 15 years that have filed for bankruptcy. In 2012, the company's former parent, Collective Brands, was taken private in a $1.3 billion transaction involving private equity firms Golden Gate Capital, Blum Capital Partners and Wolverine Worldwide. That left the retailer with debt of $838 million as it entered its 2017 bankruptcy. As it exited, the retailer said it would close 900 stores and shed $435 million in debt — still enough to hobble it going forward.
Correction: An earlier version of this story neglected to mention the date of Payless' bankruptcy filing. The footwear retailer filed late on Feb. 18.
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