UPDATE: February 8, 2019: The shoe retailer is close to another Chapter 11 filing and has plans to shutter most or even all stores in North America, Bloomberg reports, citing unnamed sources. Payless declined to comment to Bloomberg and didn't immediately return Retail Dive's request for comment.
Payless ShoeSource has hired investment firm PJ Solomon to help look into its "strategic alternatives," including a sale or restructuring, unnamed sources told Reuters Tuesday. That could include a bankruptcy filing, according to the report. Payless didn't immediately return Retail Dive's request for comment.
The discount footwear retailer's lenders late last year were reportedly bracing themselves for such a move, amid falling sales and signs of financial difficulty, Debtwire found.
Payless spent 2018 as a leaner retailer and tried to make a splash in a variety of ways, including opening nine holiday pop-up stores in large industrial spaces with "a more modern look and feel than traditional Payless brick-and-mortar stores" and pulling a comical prank in a former Armani space that had big-spending influencers gushing over upscale "Palessi" merchandise that were actually $30 Payless shoes.
None of that has been enough to spur a level of sales to keep the retailer in the black, however. For the fiscal 2018 quarter ending Aug. 5, sales fell $15 million year-over-year to $426 million, missing expectations by $26 million, according to Debtwire's earlier report. Same-store sales rose 3.3%, far lower than the 9.9% projected increase, with reduced traffic particularly in North America, Debtwire said.
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.