Payless Inc. and its North American subsidiaries filed for bankruptcy protection, with the discount shoe retailer saying it plans to close its 2,500 stores in North America by the end of May.
The company, which is taking its second trip to Bankruptcy Court in two years, said retail operations outside North America, including company-owned stores in Latin America, aren’t included in the Chapter 11 filing and will continue business as usual. The company, which sought relief in the U.S. Bankruptcy Court for the Eastern District of Missouri, said last week that it would begin liquidation sales and shut down its online operations.
“The challenges facing retailers today are well documented, and unfortunately Payless emerged from its prior reorganization ill-equipped to survive in today’s retail environment,” Stephen Marotta, appointed in January to serve as chief restructuring officer, said in a statement Monday. “The prior proceedings left the company with too much remaining debt, too large a store footprint.”
The Topeka, Kan.-based retailer joins heavily indebted store chains that have gone under in the last two years, including iconic names such as Toys R Us. Retailers including Shopko, FullBeauty Brands, Charlotte Russe, Things Remembered and Gymboree have filed for bankruptcy this year. U.S. retailers have been struggling to navigate changing consumer habits, including a shift to online shopping and fewer visits to the mall.
Payless was founded in 1956 with the goal of selling affordable shoes in a self-service setting and says it’s the largest specialty footwear chain in the Western Hemisphere. The company struggled to manage debt taken on in a 2012 leveraged buyout by Golden Gate Capital and Blum Capital Partners, filing for bankruptcy protection in April 2017.
Payless has estimated liabilities of $500 million to $1 billion, according to a separate court filing.
Certain Canadian subsidiaries of Payless will also seek creditor protection, according to the company. In addition to its Latin America stores, about 370 international franchisee stores in 16 countries across the Middle East, India, Indonesia, Indochina, Philippines and Africa will continue to operate as usual.